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- đ Energy companies investigated for price rises | Baby Bunting shows Aussies are feeling the squeeze
đ Energy companies investigated for price rises | Baby Bunting shows Aussies are feeling the squeeze
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The Big Picture
Energy companies investigated for price rises. Federal Energy Minister Chris Bowen has asked regulators to investigate whether energy companies breached the law by passing through huge increase in daily supply charges. Some Australians have received notices that rates would increase by up to 86%. Bowen believes energy companies are raising these rates to offset a fall in the price of electricity thanks to record output from wind and batteries. (AFR)
Capital gains and negative gearing exemptions to end with death or divorce. Treasurer Jim Chalmers has confirmed that jointly-owned investment properties with grandfathered negative gearing or CGT exemptions, will lose those benefits if one of the co-owners die or if the co-owners divorce. (AFR)
Semiconductor rally runs out of steam. The NYSE Semiconductor index dropped 8% and the South Korean index dropped 10% as investors took profit. Micron was down 13% as investors prepared for its earnings, after its stock has run more than 300% this year. (CNBC)
Australian inflation cools in May. Annual inflation came in at 4% down from 4.2% in April. Concerningly, however, was underlying inflation rose from 3.4%. to 3.6%. (ABC)
New data shows extent of Hormuz blockage. Data from insurer Allianz suggests there are more than 1,200 cargo ships carrying goods estimated to be worth $125 billion waiting to pass the Strait. This week 69 ships have crossed out of the Gulf, up from 24 last week, according to Lloydâs. (FT)
Venezuela faces worldâs largest debt restructure. The South American nation has revealed it has $240 billion in debt, much higher than previously thought. Delcy RodrĂguez, Venezuelaâs interim leader, is looking to reach a deal with creditors that will allow the country to return to international markets. (FT)
Companies in the news
Baby Bunting signals Australians are feeling the pinch. The baby goods retailer lowered its profit guidance, pointing to weak consumer spending. The company noted three rate hikes and higher fuel costs have weighed on consumer spending. Shares were down 10%. (Capital Brief)
Zuckerberg wants in on prediction markets. After seeing the success of Polymarket and Kalshi, the CEO of Meta set a team to build their own, named âArenaâ. A key difference, Meta would have users gamble video-game-like points rather than real money. (NY Times)
SpaceX bond sale overwhelmed with orders. Elon Muskâs space company wanted to raise $25 billion, it attracted a massive $89 billion in orders. This is a sign that investor demand remains high despite the company just raising $85 billion in last fortnightâs IPO. (Bloomberg)
Bankwest to waive Lenders Mortgage Insurance for more Australians. Traditionally, doctors and lawyers have been able to get mortgages without paying LMI. Now Commonwealth-owned Bankwest will offer no LMI on 10% deposits for accountants as well as employees of big tech companies, banks and the federal government. (Capital Brief)
Oracle cuts 21,000 workers in latest AI-related restructure. The enterprise software giant announced it would cut 13% of its workforce as it realises efficiencies from AI. (BBC)
South Koreans asked to stop buying property
Last year South Korean President Lee Jae Myung vowed to pivot the countryâs wealth away from âunproductiveâ real estate investment, with the government blaming expensive housing for rising inequality and plunging birth rates, as housing costs deter couples from starting families.
However, the South Korean stock market boom is confounding those plans. SK Hynix and Samsung have pushed the index up more than 200% this year on the back of the AI data centre boom. Everyday South Koreans are now taking their stock market gains and buying houses, with proceeds from stock sales used in 13.2% of home purchases in April - nearly triple the monthly average.
The money going into property is overwhelming the governmentâs efforts to cool the property market with Seoul home prices up 3.1% between January and May. (FT)
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Invest inside of Super or outside?
We put this question to Matt Ingram, financial adviser at Northhaven Financial Management.
How should I balance investing inside of Super v out of it?
The first consideration here is competing priorities. Before locking money away until age 60, itâs important to ask whether youâre likely to need those funds sooner?
Take, for example, a 32-year-old couple starting a family, carrying a large mortgage, and planning to send their children to private school. In that situation, directing surplus cash toward upcoming expenses or reducing debt may be more practical than committing it to super where it canât be accessed for the next 28 years.
Super is a long-term vehicle, and flexibility matters when life has a lot happening in the years ahead.
The second factor is tax position. Super can be very tax effective, but the benefit depends heavily on your marginal tax rate. Concessional contributions are generally taxed at 15% rather than your marginal tax rate. If youâre on a marginal rate of 39% or 47% (including the Medicare Levy), that represents a tax saving of 24% or 32% respectively, which is significant. However, the maths looks a little less compelling if your marginal tax rate is 32%, and even less so if itâs 16%. In those cases, the tax advantage still exists, but it may not be strong enough to outweigh the loss of access to your money.
Itâs also important to understand Division 293 tax. This applies to individuals with income and concessional super contributions above $250,000. If triggered, an additional 15% tax is applied to some or all of your concessional contributions, effectively lifting the tax rate from 15% to 30%. Super can still be tax effective under Division 293, but the benefit is reduced, and it needs to be factored into the decision.
One thing I try to challenge is the assumption that not making extra super contributions means youâre neglecting your retirement. In almost every initial client meeting, I ask: âHave you been adding extra to super?â More often than not, I get a sheepish response along the lines of, âNo, but I know I should be.â In many cases, though, that same person has already had 12% of their income contributed by their employer each year. When you step back and look at their overall position, their other goals, and their tax situation, adding more to super may not actually be the best use of their money right now.
As with most financial decisions, the right answer depends on your circumstances. Super is powerful, but itâs not always the priority people assume it should be.
Want to speak to Matt or another of our hand-picked financial advisers? Fill out the form on our website and weâll put you in touch.
