Investopoly
383 episodes - English - Latest episode: 24 days ago - ★ - 1 ratingEach episode, about 15 minutes long, is packed with concise tips, strategies, research, methodologies, case studies, and ideas to help you safely and effectively grow your wealth. Stuart Wemyss, a qualified financial advisor, accountant, tax agent, and licensed mortgage broker, delivers holistic advice. With four authored books, including "Investopoly" and "Rules of the Lending Game," Stuart shares his insights through a weekly blog, which is replicated on this podcast.
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Episodes
Everything you must know about Capital Gain Tax (CGT)
December 07, 2021 21:00 - 19 minutes - 13.2 MBPaying Capital Gains Tax (CGT) isn’t necessarily a bad thing because it means that you have sold an asset and made a profit, which is better than a loss, of course. That said, I’m certain that most people would prefer to pay less tax, not more. Therefore, it’s important to understand the ins and outs of CGT. Capital Gain Tax basics The amount of tax you must pay on any capital gain is calculated using the below formula (for any asset purchase after 20 September 1985). See here. (A) Net ...
The three most common mistakes made by investors
November 30, 2021 21:00 - 16 minutes - 11.3 MBAfter almost 20 years of interacting with investors (and potential investors) on a daily basis, I’ve noticed some common themes that prevent investors from achieving their potential. If you can avoid all three, you are almost guaranteed to achieve financial security. Whilst some of these matters seem relatively simple, you should not let their simplicity fool you into thinking that they are anything less than critical. Why do we tend to overcomplicate matters? I believe that investing is ...
Are we in a bubble or micro-bubble?
November 23, 2021 21:00 - 19 minutes - 13.7 MBWith property and share markets trading at all-time highs, it’s reasonable and perhaps prudent to consider whether we are in a (asset price) bubble. Bubbles cannot grow indefinitely and at some point, all bubbles burst. Is the share market about to crash? Share markets around the world have been incredibly resilient throughout the pandemic and almost all markets are trading above pre-pandemic levels. That probably shouldn’t come as a big surprise, as government fiscal support here and abro...
How to attract a great advisor
November 16, 2021 21:00 - 22 minutes - 15.7 MBA financial advisor’s job is to develop a plan and help you implement that plan over many years, so that you achieve your financial and lifestyle goals. This includes navigating the inevitable changes in your circumstances, markets, investments and so forth – knowing when to stick to the plan and when to alter it. Achieving your financial and lifestyle goals is an incredibly valuable outcome. Therefore, it is very likely that financial advisory fees will be a small fraction of that value. ...
How to invest in property for less than $1 million
November 09, 2021 21:00 - 20 minutes - 13.8 MBIt is becoming increasingly difficult to buy an investment-grade house for under $1 million in Brisbane, Melbourne and Sydney. This begs the question; if your investment property budget is less than $1 million, where and how do you invest it? Brisbane is becoming more difficult In early August 2021, I presented an investment case for buying an investment-grade home in Brisbane. My wife and I subsequently followed this advice (I put my money where my mouth is) and we purchased an investment...
Inflation and interest rates: where are they heading?
November 02, 2021 21:00 - 19 minutes - 13.5 MBThe topic of rising inflation and its potential impact on interest rates has been dominating the financial press over the past few weeks. The bond markets expect that higher inflation readings will force central banks to raise interest rates. It’s my opinion that higher inflation is likely to be temporary. And it’s also useful to remember that “markets” (and popular opinion) are not always right. Bond markets priced in higher inflation in February 2021 but eventually normalised after a few ...
Will the property market ever crash?
October 26, 2021 21:00 - 18 minutes - 13 MBWill the property market ever crash? I started ProSolution almost 20 years ago and if there’s been one common theme over that time, it is how “expensive” property is. This theme can be expressed in many ways such as predictions of property market crashes, housing affordability “crisis”, comparison of Australian property prices to other parts of the world and so forth. This noise is often unhelpful for property buyers. The reality is that property has always seemed relatively expensive. And...
How do the big changes to income protection insurances affect you?
October 19, 2021 21:00 - 21 minutes - 14.7 MBI wrote a blog in February 2020 highlighting the first phase of government mandated changes to income protection insurance products. The second phase of changes were implemented at the beginning of this month, and they are very significant. This blog discusses these important changes and how they may affect you. Background In December 2019, the insurance industry’s regulator (APRA), released a report outlining a number of compulsory changes that it mandated for income protection insurance ...
Freedom to choose the work you do for love, not money (how to plan)
October 12, 2021 21:00 - 18 minutes - 12.5 MBI have noticed that more people are attracted to seeking out work that they have a personal connection with, particularly since the beginning of Covid. That is, for a growing number of people, the emotional rewards (satisfaction) that their work offers is becoming more important than the financial rewards. This might include working in the not-for-profit sector, working for a socially conscious organisation or starting their own business. Of course, not everyone has the flexibility to immed...
Likely tightening in lending rules is unlikely to impact investment-grade property
October 05, 2021 21:00 - 18 minutes - 12.5 MBFederal Treasurer, Josh Frydenberg has asked the Council of Financial Regulators to investigate the fact that credit growth is materially outpacing growth in household income and to advise on any policy responses. In lay terms, the Treasurer is worried that people are borrowing too much money compared to their incomes and that could be risky for the economy. Increase in home lending is pronounced It has been well documented that house prices in Australia have been rising at a fast pace ov...
How much insurance is do you need? And how do you minimise its cost?
September 28, 2021 22:00 - 17 minutes - 12.2 MBPersonal insurance is becoming more difficult to obtain and increasingly costly to maintain. This blog outlines the approach we take when formulating how much insurance our clients need and strategies to manage its cost. What is personal insurance? This blog refers to personal insurance only. That typically includes up to four products: § Income protection insurance – which pays a monthly benefit if you are unable to work due to illness or injury; § Life – pays a lump sum benefit if you ...
How to value stocks - an introduction to valuation concepts
September 21, 2021 22:00 - 23 minutes - 16 MBHow to value stocks – an introduction to valuation concepts Two years ago I wrote a popular blog that explained some simple share market concepts and jargon (see here). Building on this introductory information, I thought it was timely to discuss basic share market valuation principles to help investors assess whether a stock is over or under valued. To be clear, I’m not advocating investing in direct stocks. In fact, there is an overwhelming amount of evidence that demonstrates direct sha...
Mastering a successful mindset... 5 fears about money
September 14, 2021 22:00 - 20 minutes - 13.8 MBOver the past 20 years, the US share market has risen 5-fold, the Australian share market 5.4-fold and Australian property 4.2-fold. That means if you invested half a million dollars 20 years ago, in either shares or property, it should be worth between $2 and $2.5 million today. You’d have even more money if you added some gearing. This observation raises an interesting question. That is, why aren’t more people independently wealthy? I suspect the answer lies in their actions, or more corr...
Loan structuring 101: How to finance a property portfolio
September 07, 2021 22:00 - 21 minutes - 15.1 MBBorrowing to invest in property is a popular and highly effective wealth accumulation strategy if it’s implemented correctly. However, loan structuring can often be an afterthought. The reality is that loan structuring and maximising your borrowing capacity is almost just as important as buying the right property. This blog sets out how to structure your loans to build a property portfolio. A step-by-step example The video below takes you through an example of how to structure your loans. ...
A powerful share market investment strategy you can implement yourself
August 31, 2021 22:00 - 23 minutes - 16.5 MBInvesting in the share market is a relatively easy, simple and a low-cost investment strategy to implement, if you know the right way to do it, of course. However, if you don’t know what you’re doing, it’s easy to mess it up. In this blog, I set out how to implement a highly successful (over the long run) share market investment strategy using a low-cost, evidence-based approach. Of course, the information in this blog (and in fact, in all my blogs) is general in nature. It’s not written or...
What impact will the prolonged lockdowns have on the property market and economy?
August 24, 2021 22:00 - 20 minutes - 14 MBApproximately half of Australia’s population is currently in a lockdown, and this may continue for another few months until vaccine target levels are reached. I wanted to discuss what impact this may have on the property market and the broader economy. Of course, there are wide ranging impacts The impact of Covid lockdowns can be wide-ranging. Dealing with the challenges of home schooling, not seeing family, not enjoying your normal pastimes, business failures, job losses, mental health ch...
Land tax minimisation (or elimination) strategies
August 17, 2021 22:00 - 19 minutes - 13.3 MBLand tax is levied on the value of an investor’s landholdings on 31 December each year. It is an insidious tax as any land tax is relatively small when you initially purchase an investment property but typically increases each year. As such, the problem is that it can become quite costly by the time you reach retirement – a time when it’s preferrable to pay less tax, not more. There may be several opportunities to minimise land tax which are discussed in this blog. Land value is a vital at...
Property versus shares; a practical comparison
August 10, 2021 22:00 - 18 minutes - 12.5 MBAs a completely independent advisor, I have no vested interest in how my clients invest. Whether they invest in property, shares or any other asset class makes no difference to my life. Of course, I want them to invest in (1) assets that are most appropriate for them and (2) assets that provide the highest returns without taking unacceptably high risk. I know that if I help my clients invest successfully, they will continue to remain clients and therein lies my firm’s success. Often investor...
Investment case for Brisbane property: Pros and cons
August 03, 2021 22:00 - 18 minutes - 12.9 MBI hosted a seminar in August 2018 where I presented an investment case for (investment-grade) houses in Brisbane in the $800,000 to $1m price range. It was my thesis that they represented excellent value and had a high probability of delivering above-average returns in the medium term. An investment grade house that sold for circa $800,000 in late 2018 would be worth well over $1 million today. Depending on your financial position, existing assets and investment strategy, an investment-grad...
2021 super returns: The best industry funds & important considerations
July 27, 2021 22:30 - 20 minutes - 14.2 MBIt is not unrealistic to expect your super returns to be over 20% for the financial year ended June 2021. Of course, this is a great outcome in what has been a tumultuous year. However, I would like to highlight some important observations and considerations. And the 2021 winner is… The table below sets out investment returns for the largest 8 industry funds based on a Balanced investment option (data from Lonsec). The table is sorted by 1-year returns, highest to lowest for the financial ...
How you can use mean reversion to drive investment returns
July 20, 2021 22:30 - 11 minutes - 8.25 MBOne of the challenges that many investors face is deciding what to invest in, how much and when. There are three methodologies that you can employ to help make this decision, but only two are supported by evidence. What is mean reversion? Mean reversion is a financial theory that suggests a period of above average returns is often followed by a period of below average returns, such that the average return over both periods is close to an asset class’ long term mean (or average) return. Ma...
When to not invest: 5 questions to ask
July 13, 2021 22:00 - 15 minutes - 11 MBThere are a number of factors that I consider when contemplating an investment on behalf of my clients or for me, personally. I think it’s very important to consider a vast array of investment opportunities (or appoint an advisor to do it on your behalf). But it is even more important to discount most of them. Being diligent, setting a high bar and having the discipline to stick to sound fundamentals is critical for success. This blog sets out the important factors that I always consider. ...
Are investment returns that important?
July 06, 2021 22:00 - 16 minutes - 11.3 MBLast week a prospective client asked me a very good question. They asked whether I have data that shows what investment returns my clients have generated. Whilst this sounds like a logical question, my response was that not only did I not have this data[1], but it also wouldn’t necessarily be that useful. The reason is that investment returns are highly dependent on a client’s stage of life, their risk profile, the quantum of their investable income, their starting financial position and so ...
Investing in property in the outer suburbs - should you do it?
June 29, 2021 22:00 - 18 minutes - 12.4 MBSome buyers’ agents promote investing in more affordable locations. I can understand why some investors might be attracted to follow their advice. But it’s not until you delve into the theory and evidence that it becomes blatantly obvious that such investments have a high probability of under-performing. Here’s an example I saw on social media I noticed a buyers’ agent advertise that he bought this "north Brisbane" property for a client for $530,000. He estimated that the rental income wou...
How to ensure your superannuation will be paid to your intended beneficiary
June 22, 2021 22:00 - 15 minutes - 10.4 MBTwenty-three-year-old, Ashleigh Petrie nominated her mother as the sole beneficiary of her super. However, Ashleigh’s 63-year-old fiancé was successful in claiming her full super balance after she died in a car accident. Ashleigh was in a relationship with her fiancé, Rodney Higgins for only 7 months (living together for four of them). This story highlights the pitfalls and limitations to super fund death benefit nominations. Superannuation doesn’t form part of your will A super fund is a ...
Don't buy property in this market...
June 15, 2021 22:00 - 13 minutes - 9.47 MBIt is true that buying a property in any market will generate a lot of wealth as long as you (1) buy the right property and (2) hold it for a few decades. But it is also true that you do not need to rush into the market at the risk of substantially overpaying. My wife and I planned to buy an investment property this year so we have been monitoring the property market a bit closer than usual this year. Of course, we expect to pay fair market value for a high-quality asset (quality assets rar...
How to prepare your business for sale and maximise your after-tax proceeds
June 09, 2021 21:02 - 14 minutes - 13.8 MBThere are many reasons to improve the saleability of your business, including if it's your plan to sell your business in the future, of course. Other reasons can include succession planning, to raise capital, reduce your working hours and so on. In this episode, Mena and Stuart discuss: •The five steps involved in maximising the saleability of your business and what's involved in each of these. •How to use the small business capital gains tax (CGT) concessions to potentially reduce any CGT...
Sophisticated borrowers to jump through fewer hoops to get a new loan
June 08, 2021 22:00 - 14 minutes - 9.91 MBThe Corporations Act makes a distinction between wholesale and retail clients. It is assumed that wholesale clients have a sufficient level of financial literacy to self-assess the appropriateness and risks of various investment products and to protect this own interests. As such, there are fewer disclosure obligations (and lower compliance costs) for financial services businesses working with wholesale clients. It is my contention that similar provisions should be available to banks and mo...
Warning: 3 reasons why negative gearing is in jeopardy
June 01, 2021 22:00 - 15 minutes - 10.5 MBOne of the Australian Labor Party’s (ALP) big election promises in the 2019 federal election was to abolish negative gearing. It would be logical to think that the ALP’s shock election loss in 2019 will serve as a warning for policy makers. That is, banning negative gearing is an unpopular policy. However, I would caution investors against assuming that negative gearing is here to stay. What is negative gearing? Negative gearing allows investors to offset property investment losses against...
How to scale your business to multiply your profits
May 27, 2021 01:18 - 15 minutes - 14.2 MBKnowing how to scale your business is the fastest and most successful way to multiple your business' profitability. That is why it's important to consider if your business lends itself to scaling and if so, how to do it. In this episode, Mena and Stuart discuss: § Three examples of how business' achieve saleability including building a well-known brand, productisation and build-in the desire/incentive to 'share' in your product. § Some businesses don't lend themselves to sharing, and of cours...
Active share investors failed to take advantage of last year's volatility
May 25, 2021 22:00 - 14 minutes - 9.83 MBActive fund managers use their skill and experience to pick which stocks to invest in. An alternative to active investing is to invest in low-cost index funds. One criticism of index funds is that they blindly invest in a broad index which might not always make sense. Index funds participate in the highs and lows. This led me to consider how well actively managed funds did last year. Last year’s share market opportunities Between 1 January 2020 and mid-March, the international share index ...
Pros and cons of buying property without a pre-approval
May 18, 2021 22:00 - 19 minutes - 13.6 MBMany 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 p...
How to prepare a practical and actionable business plan - and why it's so important
May 13, 2021 00:22 - 17 minutes - 16.4 MBMany business owners prepare a business plan when they first start their business. But this document is never looked at again. We encourage our clients to invest one day every two to three years to draft a practical and actionable business plan. In this episode, Mena and Stuart discuss: •Why it's the best investment of your time. A business plan provides multiple benefits including sharpening your focus, motivating employees, obtaining finance and/or investors and so on. •A deep dive on th...
2021 Federal Budget - Financial planning opportunities
May 12, 2021 00:02 - 16 minutes - 11.2 MBTreasurer 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 deposit The First Home Super Saver (FHSS) scheme was introduced four years ago to help first home buyers save a deposit. In summary save...
How to make the most of your super increase (after 1 July 2021)
May 04, 2021 22:00 - 21 minutes - 14.5 MBAfter 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 increase It has been reported that the government was contemplating delaying increasing the Superannuation Guarantee Charge (SGC). The increase in SGC was propos...
A business owners most important decision is setting the price of their product or service
April 28, 2021 22:00 - 11 minutes - 11 MBIf your net profit margin is 20% and you increase your price by 10%, you will increase your profit by 50%! That is why pricing is probably the most important decision that a business owner makes. However, most business owners spend very little time setting prices. Mena and Stuart discuss: § Why pricing decisions are so important. § Common methods used to set prices. § Three proven strategies to improve pricing power (and therefore profit). § How to optimise pricing depending on your business ...
Tax: How to minimise your largest lifetime expense
April 27, 2021 23:00 - 15 minutes - 10.5 MBTax 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 tax It 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 harde...
Don't underestimate the mathematical power of gearing
April 20, 2021 23:00 - 15 minutes - 10.6 MBIt’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 cha...
How to turn your business into a cash flow machine (self-fund growth and personal needs)
April 15, 2021 02:00 - 14 minutes - 13.1 MBCash flow is the lifeblood of any business. A business that generates an increasing amount of free cash flow as it grows can self-fund its future growth. It can grow infinitely. However, a business that doesn't generate free cash flow will eventually die (without constant equity injections). This is the topic of episode four: how do you turn your business into a cash flow machine. Mena and Stuart discuss: •The four elements that impact a business' cash conversion cycle and we share tips on ...
Investment opportunity: Is the share market switching to value?
April 13, 2021 23:00 - 18 minutes - 12.6 MBGrowth 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 growth A ‘value’ approach involves investing in companies that appear to be under-valued by the market. Investors use ...
Why property price growth will level out over the rest of this year
April 06, 2021 22:45 - 18 minutes - 12.4 MBThe 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 reasons Last month, a property located in the Eastern suburbs of Sydney (209 Edgecliff Road, Woollahra) sold for $1.5 million more...
What should you ask your accountant to focus on?
March 31, 2021 21:00 - 16 minutes - 15 MBImagine your accountant came up with an idea that would save you $30,000 in tax each year for the next 20 years. That one idea would be worth over $460,000 to you (in today's dollars). That's what you want your accountant working on. However, historically, accountants spend most of their time helping their clients meet all ATO compliance obligations such as preparing Business Activity Statements and tax returns. A holistic accountant should be finding ways to use technology to automate and s...
What is a holistic accountant? What value do they provide? When to use one.
March 30, 2021 23:00 - 13 minutes - 9.3 MBThe 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 a...
Investment lending rules to be tightened this year
March 23, 2021 22:00 - 14 minutes - 10.1 MBAlmost 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 prices Wes...
How to ensure your business helps you achieve your financial and lifestyle goals.
March 17, 2021 21:00 - 16 minutes - 15.6 MBThere are many non-financial reasons that encourage people to start their own business. But it's important that you are fairly rewarded (financially) for your time, effort and risk. It might be your goal to build your businesses value and sell it one day. But as a plan B, you must direct a proportion of your annual profit towards building a personal nest egg. Stuart and Mena show you how to do this including: - The three common tax-effective ownership structures to use to build wealth - How t...
How to avoid being ripped off by a financial advisor: 3 simple checks
March 16, 2021 22:00 - 16 minutes - 11.5 MBIt 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 manager Virtually all fraud com...
Bitcoin, (unprofitable) billion dollar stocks and other madness
March 09, 2021 22:00 - 15 minutes - 10.9 MBDo you realise that $10,000 invested in Bitcoin 5 years ago would be worth over $1.1 million today? Makes you think, right? With lockdowns occurring almost everywhere around the world, no one is travelling and AirBNB’s business has been decimated. Yet, its share price has risen by more than 40% over the past year, and it is currently worth nearly $160 billion. That is $10 billion more than Australia’s most valuable company, CBA. Oh, by the way, AirBNB lost $5.8bn in the 2020 fiscal year. In...
What's involved in changing accountants (and how to find a good one)?
March 02, 2021 22:00 - 12 minutes - 8.29 MBChoosing the right accountant can make a world of difference. A proactive accountant will share tax-saving and wealth-building ideas, be available to answer questions during the year and ensure you never end up in the ATO’s ‘bad-books’. Common complaints There are two common complaints about accountants. Firstly, that they don’t provide proactive advice, including wealth building ideas. They are so involved in their day-to-day work that they don’t stop to ask themselves; “if I was in this...
Common business structuring mistakes and how to avoid them
March 01, 2021 23:00 - 17 minutes - 16.4 MBYour business structure is critical because it will dictate how much tax you pay, whether you will be able to build personal wealth effectively, if your assets are protected and your overall financial success. We see lots of costly mistakes. We discuss how to avoid these mistakes and structure your business to achieve personal success.
Steppingstone strategy: how to buy your dream home
February 23, 2021 22:00 - 14 minutes - 10.1 MBIf the recent property price growth predictions become reality over the next couple of years, more homeowners may become ‘priced out’ of their desired location. What might be affordable today, could quickly become unaffordable, as prices can rise quickly. Sometimes it’s not possible to buy your dream home in one fell swoop. But do not despair. A steppingstone strategy could be the solution. Buying a dream home has always been a struggle, embrace it Property has always seemed expensive. I ...