Interest rates may be on the rise, but a total rise of over three per cent is hard to conceive and would be of little use to anyone who is trying to exist on bank interest.u003cbru003eInterest rates may be on the rise, but a total rise of over 3 per cent is hard to conceive and in any event would be of little use to anyone who is trying to exist on bank interest.Index means a measure of value.The Consumer Price Index (CPI) measures the cost of consumer goods; the Happiness Index measures how happy the citizens of a country are, based on certain criteria; the various stock market indices measure the value of a particular set of shares on one or more stock exchanges.There are many stock exchanges around the world and many indices within those stock exchanges.An index fund is an investment fund which invests in a category of assets, rather than trying to pick winners out of the whole range.
u003cbru003eIt’s a bit like having a bet on every horse in a race.But because you are backing every horse your returns will tend to be lower than if you picked a long-shot winner.Two well-known index funds have the ASX codes of VAS and STW.The former invests in the top 300 shares in the Australian share market, the latter invests in the top 200 shares.Given that the top 200 is over 95 per cent of the market, their returns tend to be fairly similar.Currently these two shares are paying around 4.5 per cent yield of which about 80 per cent is franked.Of course, there are many other index funds such as those that track the Su0026amp;P 500, the Dow Jones Industrial Average and various specific asset classes such as bonds and gold.I tend to focus on index funds like VAS and STW because they track the Australian share market and also pay franked dividends.
However, in consultation with your adviser you should decide which asset classes are right for you and the best way to invest in them.The benefits of index funds are that they are low-cost, there are no specific shares to select and you have immediate liquidity if the index fund is listed.As far as security goes, the index cannot go broke because it is simply tracking a basket of assets, but it will perform in line with those assets.u003cbru003eTherefore, if you chose an index fund that invested purely in crypto currencies, you would expect it to be more volatile than one which invested only in Australian shares.Anybody investing in shares should take a long-term view and be prepared to hold their portfolio when the market goes through a normal volatile phase.Furthermore, if they are retired, they should keep at least three to five years planned expenditure in cash form so they are never forced to liquidate shares at the worst possible time.For example, an investment of $100,000 in January 2010 would now be worth $281,000.That’s a gain of 8.99 per cent per annum for 12 years.I reckon that’s a better bet than bank interest.u003cstrongu003eQuestionu003c/strongu003eIn recent columns you have referred to asset-tested pension recipients being able to update their account balances online, but this is not happening for me.My account allows me to download the form and then I upload it through MyGov, which has worked well until the current financial year.I submitted a form that was not processed so I submitted two more forms that were not processed.
I then wrote a letter asking whether current policy allowed these submissions.
I received no reply to my questions but the forms were processed as I Quote: d receipt numbers.Do you have any information on current Centrelink policy regarding whether recipients of a part Age Pension under the Asset Test can use the Income Stream Review feature on the Centrelink section of the MyGov website?u003cstrongu003eAnsweru003c/strongu003eServices Australia General Manager Hank Jongen tells me that customers can make updates to their account-based or market-linked income streams by using the Centrelink online services through myGov.Defined benefits, lifetime, life expectancy or term income streams do not have balances and cannot be updated in the same way.Updates can also be made using the document lodgement service to upload scans of income stream schedules or statements for balances to be actioned by Services Australia staff.As of 2019, income streams are automatically updated twice a year in February and August through the automated income stream review process.Customers may also be required to provide updates to Services Australia through customer based reviews.
If customers are required to provide information to Services Australia, they will receive a one-time access code to allow them, or a trusted third party, to complete these updates online.u003cstrongu003eQuestionu003c/strongu003eI am 55 and have only been working for 15 years.I own my home and as I only have a little bit in my super, I was thinking of using my home to buy an investment property to help give me more income in my retirement.Is this a good option or should I try to put more money into my superannuation?u003cstrongu003eAnsweru003c/strongu003eIn your situation I don’t think taking on a big debt to buy an investment property would be a good idea, especially in the current overheated market.
Furthermore, as time passes rental properties tend to incur increasing costs for maintenance and if you need to withdraw some money you have to liquidate the entire property as you can’t sell a portion of it.I think a better strategy is to focus on building up your superannuation and make tax-deductible concessional contributions where appropriate.u003cstrongu003eQuestionu003c/strongu003eDoes this mean after that date I could contribute the $400,000 back to superannuation as a non-concessional contribution? Does the usual 15 per cent contribution tax apply to this payment?Furthermore, you mentioned a death tax in that article – I was under the impression that there was no death duties payable in Victoria.Will this apply to the bequest from my aunt?u003cstrongu003eAnsweru003c/strongu003eProvided you are under age 75 at July 1, 2022 and your total super balance is less than $1.48 million, then you could both contribute $200,000 as non-concessional contributions to superannuation after July 1 using the bring forward rules.There is no contributions tax on non-concessional contributions.The death tax refers to the tax of 15 per cent plus Medicare levy, which applies to the taxable component of your superannuation fund left to a non-dependent.This would not apply to a bequest from her..