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According to the ABS, the number of people refinancing their mortgage increased by over 63% in the year to May 2020. Quite often people think the only reason to refinance is to obtain a lower interest rate. However, this thinking is incorrect. Typically, you don’t need to refinance to obtain a lower interest rate (more about this below). As an experienced investor myself, I can tell you that there are far more important reasons to refinance your loans.What is a refinance?This might sound like a basic question. However, there are two types of refinances; internal and external. A refinance essentially involves entering into a new loan agreement. You can do that with your existing lender/bank, and this is called an internal refinance. Alternatively, you can switch to a new lender and this is called an external refinance. This distinction is important for my discussion below.The first two reasons are the most importantOver the past 20 years, the primary motives for refinancing my personal mortgages were because of the first two reasons below. I’ll share why later in this blog.Reason # 1: restructure your loansYour loan structure can have a big impact on your cash flow and ability to invest. Restructuring your loan repayments, how loans are secured, loan terms and so on can provide substantial financial benefits. Here are a few examples:Resetting your interest only termAs I explained in a blog last year, interest only terms typically run for 5 years only. Once that initial 5-year term expires, most (but not all) lenders allow borrowers to rollover onto an additional 5-year term. However, once you have used two 5-year terms, the only way to get another is to complete an external refinance, and switch to a new lender.Resetting your loan term to 30 yearsAlmost all loan contracts are based on a 30-year loan term. If you elect to repay interest only, then your 30-year term will be split into two parts; one 5-year interest only term and the remaining 25-years on principal and interest (P&I) repayments. Therefore, if you use two 5-year interest terms (a second interest only term is typically only permitted for investment loans) and thenMy 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.

There are three ways to generate passive income; start a business, invest or speculate. The key word in that sentence is passive. Passive means you can generate economic benefits without the requirement of your personal exertion. Since it doesn’t require personal exertion, it frees up your time to spend it on activities or with the people you love.Each of these three options have merit. But the important thing to note is that not all three will suit everyone. This point is very important to appreciate, and could save you a lot of time, stress and money!A quick bit of theory firstLegendary author and prolific researcher, Jim Collins formulated a concept called the “Hedgehog Concept”. The Hedgehog Concept was based on the famous essay by Isaiah Berlin in which he refers to an ancient Greek story: “The fox knows many things, but the hedgehog knows one big thing.”It was Collins’ thesis that successful companies are laser-focused on the Hedgehog Concept, which is the intersection of 3 important considerations or questions (i.e. the orange portion in the illustration below):1. what you are deeply passionate about,2. what you can be the best in the world at, and3. what best drives your economic or resource engine.Successful companies focus on delivering products or services that they can be the best at and ignore all other opportunities.(By the way, Jim Collins’ book, Good to Great is one of the best business books I have read.)Let me share a quick story about meBefore I relate this theory to personal investment, let me share a story with you.I have some friends that are successful property developers and make substantial six-figure profits. In the past, I have considered whether I should get involved in property development too, especially since I have the property, finance and taxation knowledge. However, many years ago, I decided to focus on my Hedgehog. Property development just isn’t for me.Property developing takes a lot of time. So, I could either spend my time on developing property with the aim of generating a once-off profit. Alternatively, I could spend that time thinking about and helping my clients build wealth. Just one idea that helpMy 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.

Despite the share market volatility as a result of Covid-19, all major industry super funds produced a positive investment return over the past financial year. Whilst that might seem entirely good news, there are some concerns for which industry super fund members should be aware of.Let’s start with the good news firstI have compared the largest 8 Australian industry super funds. According to data collated by our research provider, Lonsec (SuperRatings), Cbus produced the best returns in the 2019/20 financial year. However, AustralianSuper produced the best long term (10 years) return, although there not a big difference between the top 3 funds (Hostplus, UniSuper and AustralianSuper). I have compared the investment options with similar levels of growth assets – but more on this below.See table on blog (website)Of course, longer term returns are what is most important. It is not always possible or even desirable to produce the best returns each and every year. Sometimes a fund has to take too much risk to do so.Investment returns are important for marketingThere is no better marketing than achieving the highest investment return as it attracts a lot of new superannuation members.I was very interested to read this article in the Australian Financial Review about Hostplus’ balanced option. For the financial year up until May 2020, it had lost 3.5%. However, as timing would have it, on 29 June 2020, the Fund decided to revalue its unlisted property 6.8% higher. This resulted in halving its its Balance options loss to -1.74% for the financial year. How convenient. I discuss my concerns with respect to transparency and accountability below.There are a number of ways a super fund can window-dress its returns including revaluing unlisted assets and changing the asset allocation i.e. being more or less aggressive than the desired allocation of the investment option.Fees vary substantially between fundsIf your super balance is relatively low, fees (and contributions) matter more than investment returns. However, as your balance grows (and certainly if your balance is above $250,000), investment returns become the most important factor.Out of the selected funds, First State Super (FSS) charges the highest fees for its balanced option at 0.95My 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.

You may have read commentary that the share market isn’t reflecting reality at the moment. For example, the share market can rise by 3% on the same day that we receive bad news in respect to the spread of the virus. Spectators are left thinking how can market values rise when global economic expectations are so negative? That is a fair question.Then there’s stocks like Tesla in the US and Afterpay in Australia.Electronic car manufacture, Tesla's share price has risen by 50% over the past couple of weeks. Its market value is now equal to the total value of Australia’s big 4 banks plus BHP combined. The difference is that the banks and BHP make total profit of $12 billion p.a. whereas Tesla loses money (and has never made money)!These exuberant valuations are happening here too. Towards the end of March, Australian listed FinTech company Afterpay was trading just above $8 per share. Today, it is trading at circa $70 per share and is worth over $20 billion. It also doesn’t make a profit.So, how do you navigate a market that doesn’t make a lot of sense?The Robinhood effectOne of the contributors to this irrational exuberance is the influx of amateur investors – often first-time investors. Back in May, Australian regulator ASIC noted there had been a 340% increase in the opening of new share trading accounts. The US has also reported a record number of new account openings this year.The theory is that people are becoming bored being locked in their homes. Sports betting and casinos are closed. So, people have turned their attention to “gambling” on the share market.FinTec companies, particularly in the US have jumped onto this trend. US provider, Robinhood is best known for gamifying share trading. It offers free stock to anyone that opens a new account – and additional free stock if you refer friends. The screen turns green if your trade is in profit (and red if its not), sends you confetti when you buy and gives you your money straight away after you sell, so you can trade again (it takes 3 days in Australia). Many brokerages in the US now don’t charge commissions or fees – instead they hide their margin in 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.

Melbourne’s Covid transmission outbreak has been widely publicised by the media. Melbourne’s daily positive test rate is relatively benign by world standards (i.e. 0.5-0.6% versus 7.5% in the USA). However, the reinstated 6-week lockdown of Melbourne is likely to have a negative impact on Australia’s economy. Melbourne is responsible for producing over 19% of Australia’s GDP.Spending has bounced back strongly with Victoria laggingFirstly, let’s start with the good news. The good news is that according to ANZ Economics, spending has bounced back relatively strongly (see charts below - click to enlarge).Spending overall is up 5.5% year-on-year to 3 July 2020. Households are spending more on goods and groceries but substantially less on travel and entertainment.Spending in Victoria is lagging compared to other States, due to the stricter lockdown rules.Victoria’s lockdowns will give rise to higher unemployment and a prolonged recessionUp until a few weeks ago, I was firmly in the V-shape camp. That is, I expected the Australian economy would recover sharply after lockdown restrictions were lifted. I based this view on the assumption that there would be more targeted government stimulus post September. To date, economic data (similar to the spending data above) has been supportive of this view.However, given Melbourne accounts for over 19% of Australia’s total GDP, Melbourne’s reinstated lockdown is likely to weigh heavily on the nation’s economic recovery.It is my view that a second lockdown will substantially harm consumer and business confidence. A few weeks ago, restaurants and entertainment venues were contemplating reopening. Now they won’t be able to do that for at least another 6 weeks. There are not many (otherwise) viable businesses that could survive a 5-month closure. As a result, I fear that more businesses will not survive this period and as such, unemployment will rise and take much longer to recover.Based on data from March & April, the following categories of expenditure will likely suffer the most: dining and takeaway, accommodation, entertainment and travel.Impact of immigration, education and population growthBorder closures will have a negative impact on population growth due to reduced levels of overseas and interstate migration. And population growth drives economic activity and property values.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 price you pay for an investment property will only matter if you purchase the wrong asset. An investment grade asset will, in the long run, mask any purchase price errors that you may have made. That is why focusing on the quality of the asset is easily the most important thing you must do when investing in property. Simple math proves timing the market or buying below fair value is relatively meaningless.Purchasing above or below intrinsic valueLet’s face it. We all want to get the best deal we can, and no one wants to pay any more for a property than they have to. It is my guess that the desire to buy well is driven mainly by two things; ego and misinformation.Most people feel stupid if they subsequently realise that they overpaid for an asset - and none of us like feeling stupid.The misinformation problem is that most people think the price they pay for an asset will have an impact on its performance. But that is not true for investment grade assets.Show me the numbersAnyone that has followed my blogs for any length of time knows that I love to dive into the numbers. This topic is no different. My findings are summarised in the table below.I compared the after-tax compounding returns resulting from investing in a $750,000 property, holding it for 20 years and then selling. I assumed that you borrowed the full cost of this acquisition (including stamp duty). The only cash you had to contribute to the investment is the holding costs i.e. the difference between the loan repayments and net rental income. I then calculated the internal rate of return - which essentially is your annual compounding investment return after tax.I then varied two assumptions:§ Whether the price you paid for the asset was above or below intrinsic value; and§ The average capital growth rate over the 20-year holding period.The reason the investment returns ranges (far right column) might seem high, particularly for higher growth scenarios, is because of the impact of gearing i.e. you achieve relatively large returns for minimal cash contributed towards the investment.What did I find?If you purchase a property that has very low growth prospects e.g. 3% p.a. over 20 years, the price you pay for that asset will have a big impact on your investment return. For example, if you purchase the asset for a price 10% below iMy 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.

Over the past decade, investors and large institutions have been deserting expensive active fund managers in return for using their cheaper index equivalents.According to Morningstar, investors in the US withdrew $USD204 million from actively managed investments (net) in the 2019 calendar year. However, low cost index funds continued to grow in popularity receiving (net) $USD162 million of new money. The transition away from active management into low-cost index funds has been happening for over a decade.Whilst it is true that traditional market cap indexing has outperformed many professional managers over long periods of time, it does have its shortcomings, particularly in markets other than bull markets.It is my thesis that investors would be well advised to employ a selection of fundamentally sound indexing methodologies. Doing so can reduce a portfolios risk and potentially expose it to higher future returns.What are the recent stats of index versus active?Index funds are popular for good reasons. As I have written about previously, index funds typically produce better returns over the long run and charge much lower fees.For example, only 16% of active fund managers have produced better returns than the index over the past 15 years in Australia (and only 11% in the US). However, it is important to note that the same fund managers have beaten the market each and every year. In fact, active fund managers may only outperform for one or two years. Statistics show that their outperformance almost never persists for longer periods of time.According to data published by S&P Dow Jones, 81 Australian fund managers where in the top quartile in terms of performance for the 2015 year. Only 11 out of 81 remained in the top quartile a year later i.e. 2016 calendar year. And only 5 out of 81 were able to string three good years together (i.e. were in top quartile in terms of performance for 2015, 2016 and 2017). It is clear that ‘picking’ an active manager that will outperform is a very difficult thing to do, as it is likely you will need to chop and change fund managers every 1-2 years.Three types of indexMy 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.

If you have a couple of thousand dollars surplus cash each month, what is the most effective way to invest it?You could invest in the share market, repay your mortgage(s) or invest in property.But there’s another strategy that might be particularly more attractive, especially since mortgage interest rates are ridiculously low at the moment.You may not want to repay debt or invest in shares or propertyIt certainly doesn’t cost a lot of cash flow to borrow to invest in a residential property at the moment. However, it is difficult to buy an investment-grade property for less than $600,000, which means you need to borrow a relatively large amount of money. If you already own some direct property, you may not feel comfortable borrowing this amount of money.Repaying debt at the moment might only save you 3% p.a. in interest costs, which isn’t terrible, but it’s hardly a big return on your investment.And of course, you could invest your cash flow in shares in your personal name or family trust. But if you are relatively close to retirement (within 10-15 years), investing inside super could be a lot more tax effective.So, what about borrowing to fund additional contribute into super?First, let me clarify how you can contribute money into super.What is a non-concessional contribution?There are two types of super contributions being ‘concessional’ and ‘non-concessional’.Concessional contributions are more commonly utilised because these contributions are made pre-tax i.e. you receive an income tax deduction for them. You can make concessional contributions via salary sacrifice or by making a personal contribution into your super account. These contributions are taxed inside super at a flat rate of 15%.Non-concessional contributions are after-tax contributions i.e. they do not affect your income tax position (no tax deduction). As such, they do not attract any superannuation taxes either (no contribution tax).If your super balance is less than $1.4 million at the beginning of the financial year, you can make non-concessional contributions of up to $100,000 per year. Alternatively, you can bring forward 3 years of contributions into one i.e. contribute $300,000 in one year and nil for the following 2 years.This page on the 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.

With the financial year coming to a close, I thought it was timely to share some of the common strategies we consider when helping clients minimise their taxation liabilities.Of course, none of the information below should be considered personal taxation advice. I don’t know your circumstances and everyone’s situation is different. Therefore, please don’t act solely on the information contained in this blog. It is best to check with an experienced and appropriately licensed professional.New work from home deductionsTo accommodate the fact that the majority of people have been working from home during the Covid shutdown period, the ATO has provided a shortcut method for these related deductions. In simple terms, employees are able to claim a tax deduction equal to 80 cents for each hour they have worked from home between 1 March and 30 June 2020.If more than one person has been working from home in your family, each person is entitled to the shortcut deduction.If you use the shortcut method, you are not able to claim any additional work from home expenses.If you do not use this shortcut method, please refer to this blog which it sets out an alternate method for calculating deductions.When to make additional personal super contributionsAnyone that is 65 years or younger is able to contribute up to $25,000 into super and claim a personal income tax deduction. Included in this concessional contribution cap is any contributions made by your employer on your behalf. This is referred to as Superannuation Guarantee Charge or SGC i.e. the mandatory 9.5% p.a.If you earn less than $250,000 per year, all contributions are taxed at a flat rate of 15%. This means you pay less tax overall. If you are on the top marginal tax rate, contributing into super saves 35% (47% versus 15%).However, if you earn over $250,000 per year, contributions are taxed at a flat 30%. This is called Division 293 tax. In this situation, you are still able to reduce your tax by making super contributions, just to a lesser extent.Finally, if your taxable income is expected to materially exceed $90,000 this financial year and you have sufficient savings, then making an additionMy 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.

Global ratings agency, Fitch estimates that the value of Quantitative Easing (QE) implemented this year could reach $9 trillion! To put that in context, that is equal to more than half the cumulative total global QE that occurred between 2009 and 2018! The Federal Reserve in the US has alone pumped $4 trillion into the market over the past 11 weeks. This is absolutely unprecedented.Should investors be worried about the long-term impact of all this money printing (QE)? What are the risks that we need to be aware of?The role of central banksCentral banks around the world are in charge of monetary policy. The aim of monetary policy is to ensure a healthy economy and an inflation rate that is within the stated goal.When the economic activity increases and the economy approaches fully capacity, inflation can begin to increase. In this situation, the central bank would normally increase interest rates (to reduce corporate profits and consumer spending) to cool economic demand. If the economy slows down, the central bank can cut rates to stimulate demand again.Interest rates is a central bank’s primary tool.But what can a central bank do when rates are at or close to zero? Of course, they can contemplate negative interest rates (e.g. in Germany, banks are paying borrowers to take out loans), but that is largely ineffective.What is QE?When interest rates stop being an effective monetary policy tool, central banks start to consider more unconventional mechanisms such as QE. QE is the process of a central bank buying assets such as bonds. They do that by issuing new currency i.e. increasing money supply (often referred to as money printing). The aim is to stimulate the economy as a whole through injecting more money into the economy.The US Federal Reserve started buying Mortgage Backed Securities (MBS) in 2009 to help the US recover from the impact of the GFC. The idea is that lenders could sell MBS to the Fed Reserve to raise funds. In doing so, banks would then have more funds to lend to property investors and homeowners. In turn this should stimulate demand for housing and aid in the property market’s recovery. To a large degree, it worked.QE is not limited to MBS, however. Central banks can buy other assets including corporate bonds and even equities, which Bank of Japan 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.