Here’s what you need to know today

• The global stock market has recovered from the ‘crash’ two weeks ago. The US stock market, measured by the S&P 500, is higher than when the crash began and the Aussie stock market, measured by the ASX 200, is well on its way after a week of gains.
  
  

• According to the ABS, Australian’s wages rose by 4.1% in the year to June. For comparison, in that same time period, inflation was 3.8%.
  
  

• The US economy continues to show signs it is holding up okay. Jobless claims came in at a five-week low and retail sales in July were better than economists were forecasting. Walmart reported sales were up 4.8% year-on-year, showing the consumer is still spending. 
  
  

• China has just launched its fifth research station in Antarctica, and it has the western intelligence community worried. With the world’s great powers already competing for influence in the Arctic, there is concern that a similar dynamic may slowly emerge on Earth’s southern tip as well.
  
  

• The US has finally allowed their government healthcare service Medicare to negotiate prices with drug companies (a policy long-instituted in most peer nations, including Australia). It is expected to save $6 billion in 2026. One example, the price of insulin made by Novo Nordisk will fall 76% at the start of 2026.
  
  

• Kamala Harris announced some of her first major policies as candidate for US President. Home ownership and affordability is top of her economic agenda, with a particular focus on stopping Wall Street buying residential homes and a $25k tax credit for first-time homebuyers. She also said she planned to ban corporate price gouging and stop grocery companies from “unfairly jacking up prices”.
  
  

• Thailand has a new Prime Minister. Paetongtarn Shinawatra, 37, is the third member of her family to lead Thailand. Her father was overthrown in a coup in 2006 and her aunt was Prime Minister from 2011 to 2014 before also being forced out by the army.
  
  

• The World Health Organisation is working to stop another infectious disease spreading around the world. A new strain of mpox (previously called monkeypox) has been spreading in Africa. Unfortunately it has now reached Europe with Sweden confirming a new case last week.

What the…?

We haven’t seen it to the same extend in Australia, but in the US the past decade has seen residential housing become a major investable asset. By one estimate, by 2030, 40% of all single-family homes available for rent could be owned by institutional investors. 

Investors now buy 1-in-4 (26%) of all single-family homes sold in the US. Traditionally, those investors were smaller investors (similar to Australia). But since the GFC some of Wall Street’s largest firms have been getting into the space. 

Investing is a lifelong journey

Here’s what you can learn today.

Question: When should one start thinking about tax-effective strategies?

We put this question to Dylan Pargiter-Green, Director and Financial Advisor at Bold Wealth.

Thinking about tax-effective strategies should ideally be an ongoing process and not something left until the last minute. As soon as you start earning a steady income and begin to save or invest, it's beneficial to integrate tax planning into your overall financial strategy. This is because tax planning can significantly affect your overall wealth accumulation and financial stability.

Starting early in your career, you should be aware of how to utilise basic tax deductions and credits effectively. This could include claiming work-related expenses, making sure you’re taking full advantage of any available rebates, and understanding how different types of income are taxed. This period is also a good time to become familiar with tax-advantaged savings plans like superannuation in Australia.

Once you progress to a higher income bracket, tax planning becomes even more critical. At this stage, considering salary sacrificing or making additional concessional contributions to your superannuation can provide significant tax benefits while also boosting your retirement savings. The Australian superannuation system allows for pre-tax income contributions up to a certain cap, which are taxed at a concessional rate lower than the marginal tax rate for most individuals. This can reduce your taxable income for the year, resulting in a tax saving while simultaneously building your retirement nest egg.

For those approaching peak earning years, generally in their 40s and 50s, it’s essential to delve into more advanced tax strategies. This includes understanding the benefits of different asset classes and how they’re taxed. For instance, long-term capital gains on shares and property are often taxed at a lower rate compared to other forms of income. Leveraging these assets judicially, perhaps through strategies like negative gearing in real estate, where the loss on rental income can be deducted against other taxable income, can be beneficial. Charitable donations, which can be tax-deductible, also become a strategic tool for both philanthropy and tax planning.

When planning for retirement, shifting assets into superannuation becomes crucial. Transitioning from accumulation to pension phase within superannuation typically reduces the tax on investment earnings to zero, and pension payments may often be tax-free for those above a certain age. Effective strategies might include coordinating with your employer on phased retirements or taking advantage of the carry-forward rules for concessional contributions if you haven’t maximised your caps in previous years.

In summary, tax-effective strategies should evolve with your financial journey, from basic tax deductions in your early years through to sophisticated investment and retirement planning as you accumulate and intend to protect wealth. Regular reviews of your financial position, alongside professional advice, can ensure you’re always optimising your tax situation and aligning it with your broader financial goals.

Want to speak to Dylan or one of our favourite financial advisors? Fill out the form on our website and we’ll put you in touch.

Today’s sponsor is J.P. Morgan Asset Management

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