Federal Budget
Tax cuts
Book review John C Bogle
Transcript:
Arch Capital Update – Wednesday 7th October 2020
Federal Budget. There is nothing to dance to? Plus book review John C Bogle
Welcome to today’s update.
Today is about the federal budget which was handed down last night. It is a very exciting time, and of course it was on the TV at home. During the program my 8 year old daughter walked in and was very concerned that I was watching something so boring, she simply said to me “Daddy, I can’t dance to that.”
Whilst this was very true, for most retirees there is similarly not much to dance to in this budget. This budget is primarily focused on creating jobs and some incentives for businesses. There are both positives and negatives to this.
This budget did not include any amendments to super that impacts retirees, and this is not a bad thing. Perhaps there were some amendments they could have made, but the changes we saw will mainly affect those that are accumulating, hold many accounts and are trying to consolidate that. Additionally, they are introducing benchmarks for different super providers which makes a lot of sense. There are so many different options out there when it comes to super, when people change jobs they can easily have a new account created for them and now the aim is to bring all those accounts under control.
The key announcement for the budget was the tax cuts. For those earning an income there are some good tax cuts that will put money back into your pockets straight away. There are also big incentives for businesses to spend on things such as infrastructure and capital works which for most businesses will now be fully deductable. This push of expenditure through the economy is with the aim to create jobs, but not much to dance to for retirees. In a way, this is not such a bad thing. A lot of the changes in previous budget nights have sometimes been disappointing for those with super accounts.
There is a very comprehensive report from Chartered Accountants and Thomson Reuters on last night’s budget. If you would like a copy, please reach out.
This week’s book review is by John “Jack” Bogle who is the founder of Vanguard. He has a very interesting journey, as a disruptor in his own day he challenged the whole funds management industry. He of course went on to create the world’s largest fund management industry today. There is approximately $5 trillion dollars invested in index funds today that is a result of Jack Bogle. He has a book called ‘A Little Book of Common Sense Investing’ that is a great little read. Highly recommended. If you can’t get a copy, please let me know and I can arrange a copy for you.
If you have any questions surrounding this year’s budget such as the detail, tax breaks etc. please do not hesitate to reach out.
