First Home Owner’s Grant - Grab it or leave it be? Money Tip without the BS

The Government’s announcement that they would temporarily double the First Home Owner’s Grant from $7,000 to $14,000 if you purchase an existing home and triple it to $21,000 if you purchase a brand new home was welcomed by the housing industry.   They certainly need a boost at the moment.

I remember the days when I was itching to buy a home and it felt great when I was able to purchase a little three bedroom home in the burbs on my own.   This was back in the early 1990s.   I sold this house in only a few years ago and it did increase in value.  However, after I calculated interest costs and ongoing maintenance I made very little from it.    At least it forced me to save. Read more

Margin Lending - the good, bad and the ugly.

Margin loans are simply an investment loan that is secured against the assets you are purchasing, such as shares and managed funds.   You don’t need to sign over your house and that is why so many people like them.    However, investors can get into trouble if their investment falls below a certain level, known as the loan to valuation ratio (LVR).

You may have heard of margin calls.   When these happen, investors are in a bind.  They can either sell down their investment to restore the LVR,  in other words forced to crystalize losses, or have to find the funds to top it up.  What a tough decision to make in this current economic climate.  You could be buying bargains, or perhaps throwing good money after bad.    Some institutions also allow you to assign other assets.  Read more

Institutions covered by the Guarantee?

Q.  Can you send me a list of all in financial institution covered by the government guarrentee of savings?

Josie’s answer: I think this is an easy one to answer.   The following documents were published by the Government in October 2008.  Remember, things are changing by the day.    If in doubt, contact the financial institution and ask for something in writing.

government-guarantee-eligible-accounts-and-institutions

government-guarantee-paramaters-oct-08

The website that I sourced this information is www.treasury.gov.au (I call it the horse’s mouth) Read more

Are the savings in our bank safe?

Q. I am wondering about savings we have with Suncorp Bank.  Is it safe or should we pull it out for the time being also which banks have frozen accounts already?

Josie’s answer: If your money is sitting in a savings account within a bank, building society or credit union that is based in Australia, then the Government has guaranteed that you will not lose your money, for the next three years anyway.    You will not find a better guarantor.

Foreign banks may be covered by the guarantee, provided they agree to pay a fee, but this can be a little confusing.  For example, ING’s parent is based in Holland, but they are covered by the guarantee as they have an Australian subsidiary (up to a $1M.  If greater than $1M then they will be charged a fee).

For example, institutions such as Duetche, Credit Suisse do not have an Australian subsidiary in Australia, just a branch office who reports to their parent overseas.   Therefore, different rules apply to them.  Some commentators argue that this is fair as they made the decisions they didn’t want to operate under the same rules and regulations that apply to our banks, building society and credit unions. Read more

Josie v Money Matters listener - understanding economics

Q. I was listening to your program on GoldFM last Sunday morning. I found it amazing the number of incorrect economic statements that were made concerning the federal governments “stimulus”package.

The bottom line is that the so called stimulus will have no impact as it is based on the mistaken belief that consumer spending drives the economy, when in fact business spending is the driver.

Any surplus is held by the Reserve Bank, and is still part of the money supply, so that it is money created out of thin air (as central banks have an addiction to which is one of the causes of inflation), but a draw down in money balances (often erroneously referred to as idle balances). Read more

5 simple ways to avoid overspending at the shops

Beat the Retailers at their own Game

We are all prone to overspending. Ladies, just look at all the clothes you have purchased over the years, and half of them you probably don’t wear. If I calculated how much I have spent just on clothes since I started work at 15 years of age, I would no doubt be horrified (best to stick my head in the sand!).

The men are not going to get away with it either. From my experience they tend to purchase big ticket items, such as big screen TVs, power tools, and stereos. Read more

How safe is our fixed term deposit with Suncorp?

Q.  How safe is our fixed term deposit of $260,000 with Suncorp that we have deposited for 3 years? I have heard a few rumours that Suncorp could be sold and wonder how safe are our funds a) if suncorp is not sold and b) if suncorp is sold. My husband and I are both now retired and wanted to be sure of our investment.

Josie’s answer:   Lots of rumours flying around at the moment that Suncorp will be gobbled up by the Commonwealth Bank or ANZ.  CBA have already pounced on Bank West.

Oh the poor banks they really seem to be really suffering at the moment (with my tongue firmly in my cheek!).   Suncorp are a second tier bank, which means they don’t have the same rating as the big four i.e. Commonwealth, ANZ, NAB and Westpac. Read more

Help! I have lost my super.

Q. Hello I have lost super and I have been told that I could use this to buy a house for our retirement.  I am 55 and my wife is 51 we are renting and would like to have a house that is ours what can we do. thank you.

Josie answer: A common problem with billions of dollars lost.  However, it is not really ‘lost’, just too many people not caring enough about their superannuation.

Super funds contact you on a regular basis, but if you have changed address it is very easy to forget.  You have worked very hard for your money and great to see you have finally mustered up some energy to find all those lost superannuation accounts. Read more

Do I have to pay Capital Gains Tax?

Q. Our son has just purchased a unit as owner/occupier but cannot move in until current lease period has expired, which is 14/01/09.   Does this preclude him from the capital gains exemption as an owner when he does finally sell, after one year of ownership of course.

Josie’s answer: Capital Gains Tax is a confusing area of tax law and it is really a question that needs to be directed to an accountant.   Anyway, I will give you my understanding of the way it may apply to your son’s situation.   He may be subject to some capital gains tax, however it will be pro-rated when he sells.  For example, if he Read more

Investment paying 12%pa - is it too good to be true?

Q.  I recently saw an investment for a sporting club raising funds that advertised 12% per annum compounded, calculated annually (over 5 years in unsecured notes.)  I have no intention of investing, but the return is interesting and seems too good to be true. Have I misunderstood the 12% pa compounding annually.

Josie’s answer:  Compounding annually means that they credit interest 12% interest on 30 June and the following year, they will pay 12% on the original investment, plus the 12% paid the previous year … and so on it goes until the end of year 5. Read more

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