Investopoly

Many people are attracted to borrowing to invest in property because of negative gearing tax benefits. That is, the (income) loss that an investment property generates helps reduce the amount of tax you pay on your salary or business income.  However, investing in shares also offers unique tax advantages. I thought it would be interesting to quantify and compare the taxation outcomes of these two investment options. Taxation of share market investmentsInvesting in shares can result in some attractive tax outcomes.  Tax credits Australia’s imputation system, which was introduced by the Hawke-Keating government in 1987, is unique to Australia. It seeks to avoid the double taxation of corporate profits. It does that by giving shareholders a credit (called franking credit) for the tax that the company has paid. For example, if a listed company makes a net profit of $100, it will pay tax at the flat rate of 30%, so its profit after tax is $70. If it pays the profit out as a dividend to shareholders, the shareholders will receive $70 in cash and a franking credit of $30. Therefore, if the shareholder has no other taxable income, when they lodge their personal tax return, the $30 franking credits will be refunded, meaning that shareholder has received $100 in total (being $70 dividend plus $30 tax refund). Therefore, investing in Australian shares which pay franked dividends is particularly attractive to taxpayers that have low tax rates such as super funds, family trusts that have adult beneficiaries with low taxable incomes, and so forth. Even if you are on the highest marginal income tax rate, you are only going to pay 17% of tax on (fully franked) dividend income, because the company has already paid 30%. If you invest in international shares, and Australia has a tax treaty with the country where the shares are listed, you may be able to claim a foreign income tax offset for the tax that you have been deemed to pay in that country. Although, these credits are not nearly as generous as the Australian imputation system. CGTCapital gains tax applies to share investments. If you hold shares for more than 12 months, you will be entitled to the 50% CGT discount, which means only half of the net capital gain will be included in your taxable incomeSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Borrowing capacity has reduced by around 30% over the past year due to the impact of higher interest rates and the increased 3% interest rate buffer that banks must use to calculate your borrowing capacity. This was eloquently depicted in this chart by CBA in February 2023. I wanted to explore the common strategies that people can use to safely maximise their borrowing capacity. How to borrow safelyI’ve written several times that building wealth is a marathon not a sprint. Whilst it is good to avoid procrastinating and invest as much as possible, you should never take high risks. When borrowing, it’s wise to plan for the worst but hope for the best. Look closely at your spending habits to ascertain how much you need to maintain a standard of living. Don’t rely (completely) on variable income such as bonuses. Test your ability to repay at higher interest rates – even if you think they are unlikely. And ensure you have adequate buffers in place to help you navigate any unforeseen changes in circumstances. As a rule of thumb, if you are borrowing more than 6 to 8 times your total gross annual income, be careful. It could be a sign that you are borrowing too much. Consider the risks. You must have an exit strategy that you can implement if everything goes pear-shaped. In my experience, it is unnecessary to borrow a huge amount to achieve your goals. People that do accumulate a lot of debt (i.e., what I would consider to be too much) usually do it because they are investing in the wrong properties. Property investing is a game of quality, not quantity. I would rather own one awesome, investment-grade property and have $1.5m of debt than a portfolio of 10 properties with $5.6 million of debt (I’m using an actual example of a portfolio that I saw recently). The former scenario will generate a lot higher risk-adjusted return over the next 20 to 30 years. My overarching point is, be careful. Don’t overborrow. Having said that, it is helpful to know what steps you can take to preserve and maximise your borrowing capacity. Here’s a few tips. Consider using a charge card instead of a credit card After many years (decades) of actively investing and using different banks, my wife and I endedSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

The unrefuted trend in all investment markets is mean reversion. It means that a period of below average returns is always followed by a period of above average returns. It is my thesis that investment-grade property in Melbourne looks attractive compared to other markets and that there are several economic tailwinds that may result in the median house prices doubling over the next decade. The macro environment is positive for propertyIn short, property prices are driven by the law of supply and demand. Demand for property is mainly dictated by interest rate settings, unemployment, and access to borrowings (mortgage lending). Supply is mainly dictated by volume of new construction and consumer sentiment i.e., whether people are willing to buy and sell property. In times of higher uncertainty, most people stop transacting, as we’ve seen over the past 12 months. Locking in higher discounts now will mean lower future interest rates All the big 4 bank CEO’s have commented that the mortgage market has become the most competitive that it’s ever been in history. Banks are offering unusually high interest rate discounts and cash incentives to win and retain customers. This chart (recently published in the AFR) suggests that banks are not generating a high enough return on new loans due to offering significant discounts. That means these discounts probably won’t last. I expect that banks will reduce discounting over the next 6 to 12 months once most of the low fixed rate loans have expired. As such, there’s a window of opportunity for investors to obtain an interest rate discount of 3% (or more) off the standard variable rate. Your discount will remain in place for the life of the loan. The chart below sets out interest-only investment interest rates after applying a 3% discount since 2003 (when the data set began) i.e., back testing to see what impact a 3% discount would have had. The average interest rate would have been 4.2% p.a. over the past 20 years (of course, this is theoretical because you would have never received a discount of that size). I think it’s realistic to expect your average interest rate to range between 4% and 5% over the long run. You should do your calculations assuming 6% p.a., just to be safe. CHARTWe need more investors to solve the rental crisis On average, borrowiSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

I was listening to Morgan Housel’s new podcast recently (which I highly recommend by the way), and he said something along the lines of; once you define your investment philosophy, you won’t be distracted by any noise that doesn’t align with it. It really resonated with me. Success with investing is more about avoiding mistakes than anything else. Therefore, having a clear, well-defined (evidence-based) investment philosophy will help you avoid getting distracted by any unhelpful ‘noise’, and keep you on the on the straight and narrow. However, if you don’t have a well-defined investment philosophy, the risk is that you’ll be easily influenced and make financial mistakes. I thought it might be helpful if I shared my investment philosophy which I can solidify it into four principles.  Principal 1: Short term returns do not help you achieve long term goals You must align your investment decision time horizons with your goal time horizons. Most people have a long-term goal of enjoying a comfortable retirement. Retirement will last two to three decades, hopefully longer. Therefore, you must align your investment decision making with that time horizon. That is, ask yourself what the best investment is you can make today that will maximise your wealth in 10, 20, 30+ years from now. Short term returns do not create long term value. Let me share an analogy. If you operated a business, your long-term goal might be to create a sustainable and profitable business. Of course, you could reduce the price of your product for the next few weeks (offer a discount) to generate more sales this quarter. But that comes at the cost of creating long term value because it cheapens your brand and trains your customers to never pay full price. However, creating brand value might not improve this quarter’s results, but if you do it consistently, you are well on your way to deriving long term value.  The challenge with becoming a successful investor is that good, long-term investments just take time. That means investors must have a strong tolerance for delayed gratification – forgoing some wealth today for a lot more wealth in the future. As Warren Buffett says, the market is very good at transferring wealth from impatient to the patient (paraphrasing). There are no shortcuts to generating long-teSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Most people struggle with knowing how to invest their money. Do they upgrade their home, contribute more into super, buy an investment property, invest in the share market, or something else? In fact, this common challenge was the reason that I decided to write my book, Investopoly. I knew that if people understood the fundamental financial planning concepts (i.e., the 8 rules outlined in Investopoly), they might be able to figure out the answer themselves. Whilst everyone’s situation is different, this blog sets out some common steps that people take at different stages in life. Starting out…The first thing you must master, is cash flow management. Once people have their first full-time job, they must learn how to effectively manage their money to create good saving habits. I recommend paying all discretionary expenses from a separate account so that you can track your total spend every week, fortnight or month, as discussed in this blog.   The goal with establishing good cash flow habits is twofold. Firstly, good cash flow habits will serve you very well for the rest of your life. Secondly, if you can save regularly, it proves that you have surplus cash flow which you can use to service a mortgage i.e., you are ready to buy a property. Once you have mastered your cash flow management, your next most important goal is to buy your first property. Buying property is the best thing to do because of the leverage it allows (i.e., borrowing). People starting out may have a decent income but few assets. Therefore, their main goal should be to accumulate a stronger asset base. Borrowing allows you to use a relatively small deposit to increase the amount you invest. It’s not about property per se, it’s all about gearing, as explained in this blog. If you have demonstrated that you have surplus cash flow but don’t have enough deposit, you should investigate whether you are able to use a family guarantee to allow you to get into the property market sooner. Before you start a family Typically, people in most occupations enjoy relatively regular promotions and higher incomes after they have moreSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Every few months, there’s a story online about an investor in their 30’s that has amassed a property portfolio of 12 properties…and how you can do it too. Firstly, we shouldn’t be impressed by the number of properties that someone owns, as it doesn’t tell us anything about their wealth (equity). Boasting about the number of properties you own is like a business boasting about the number of employees it has. It’s often an ego trip. Secondly, there’s nothing impressive about borrowing huge amounts of money i.e., more than what is sensible – that is a recipe for disaster. The definition of successful investing is achieving the highest return for the lowest risk. There aren’t any shortcuts. Building wealth takes time. A perfect example of this is that Warren Buffett accumulated more than 96% of his wealth after his 60th birthday. How do people buy 10+ properties?It might sound impressive that an investor has amassed a larger portfolio of 10+ properties in a short time, but you can’t do that without taking risks. They probably have a lot of borrowings and dealing with 10+ properties would be time consuming (e.g., administration, maintenance requests, and so on). There’s only two ways that someone can buy so many properties in a short space of time. Either they have a business that is generating a large amount of profit and cash flow, or they have a unethical mortgage broker or lender that has helped them borrow more than a sensible amount. Obviously, the former explanation is legitimate. But the latter is a recipe for disaster. Mortgages are wonderful servants but terrible masters. Borrow carefully. Building wealth is a marathon, not a sprint.  Property was more affordable 40 years agoIn 1980, the median house price was only $200,000 in Melbourne and $315,000 in Sydney in today’s dollars. For example, 40 years ago, a single-fronted, investment-grade, Victorian cottage in a nice street in Prahran (blue-chip suburb in Melbourne) would have cost you about $300,000 in today’s dollars. The same property today would cost circa $1.5 million.Of course, borrowing capacities and incomes were a lot lower back then (as I discussed in January). However, arguably an investor didn’t have to be as picky as they need to be today because they could buy 2 or 3 (or mSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Everything you must know before you refinance: https://www.prosolution.com.au/ebook/===================Share markets have been highly volatile over the past couple of years. Markets fell by circa 30% when Covid hit in March 2020 and then proceeded to boom until the end of 2021, fuelled by government stimulus and zero interest rates. However, markets fell by circa 20% in 2022 after central banks aggressively hiked rates. It’s been a wild ride. Arguably, these large volatility events should have made it a lot easier for active fund managers to beat the index. Share market mispricing, overreactions and volatility should create profitable opportunities for active managers. I wanted to investigate whether this was the case. What is an active manager?An active manager picks a basket of stocks that they believe will generate high investment returns. Active managers can achieve that using two primary methodologies. They can try to identify undervalued stocks on the hope that their market value eventually rises to what they believe is fair value (that is called a value manager). Alternatively, they can identify companies that are likely to generate a lot of growth in the future, with less focus on whether they are fairly valued (that is called a growth manager). The truth is that there are lots of different strategies that active managers use, and it could be a combination of value and growth. Because active fund managers need to employ a portfolio management team, they typically charge management fees of around 1% p.a. What is an index fund? Traditionally, an index fund invests in an index of the most valuable companies. For example, A200 is the lowest-cost Australian market index fund – it charges an investment fee of only 0.04% p.a. (e.g., fee on $100k invested is only $40 p.a.). It invests in the ASX 200 index which is the most valuable 200 companies listed on the ASX. For example, the total value of the largest 200 companies is $2.1 trillion. BHP’s value (market capitalisation) is circa $240 billion, being approximately 11% of the total index – Australia’s most valuable company. Therefore, if you invest in A200, 11% of your money will be invested in BHP. 7.8% in CBA. 6.5% in CSL and so on. An index fund is simply a managed fund that invests in a very broad basket of compSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Typically, you need a budget of circa $1.5 million to purchase an investment grade house (investment property) in Melbourne, less in Brisbane, and a lot more than $1.5 million in Sydney. Of course, not everyone can afford this budget, so I wanted to discuss how to buy the highest quality property possible within your budget. This blog will still be useful even if you do have a budget of $1.5+ million, as it will help you understand what “investment-grade” property means. What makes a property investable?Regular readers of this blog will know that I always adopt an evidence-based approach when making investment decisions. An evidence-based approach typically means adopting a rule-based approach. That is, apply a set of objective rules to identify the asset/s that are most likely to generate the future investment returns that you desire. The rules-based approach for investing in residential property involves ensuring a property has three important attributes. Properties that have these three attributes are typically considered investment-grade. Attribute 1: A persistent imbalance between supply and demand ‘Supply and demand’ is a basic economic concept that explains how many investments work. The goal with investing is to invest in assets that will generate good returns over very long periods of time. For example, an 8% p.a. return means your investment will be worth 10x in 30 years. Obviously, a 10x return will help you generate a huge amount of wealth. The most likely way to generate strong capital growth over very long periods of time is to invest in properties that are in finite supply and benefit from growing and excessive demand. When the number of buyers exceeds sellers, prices will rise. Finite supply means that there is no vacant land within close proximity, which is why well-established, blue-chip suburbs are typically great locations to invest in. A dwelling’s attributes can increase a property’s scarcity too. For example, no one is building art-deco properties anymore. Apartments blocks constructed in the 1960’s that only include 6 apartments are also very scarce – developers would probably build 20+ apartments on these blocks today.  Excessive demand can be achieved by investing in property that the wealthiest 20% of Australians desire, as their Subscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

eBook Download: https://www.prosolution.com.au/ebook/We are all aware that central banks around the world have been hiking interest rates to reduce inflation back to normal levels. The US economy, and particularly the labour market, have been more resilient than most expected. This means the US central bank might have to hike interest rates higher than in other jurisdictions to tame inflation. A consequence of this is that it will probably send the US economy into recession. And if history repeats itself, stock markets will fall. If this scenario plays out, what actions should you take now?  There are three economic scenariosShare markets have been wrestling with three possible economic scenarios as follows: §  Hard landing: this means that the Federal Reserve’s interest rate hikes achieve their aim of curtailing inflation but at the cost of sending the US economy into recession.    §  Soft landing: this is a Goldilocks scenario where the Federal Reserve hikes rates just enough to cool inflation, but not too high that it causes a recession (or it is able to cut rates in time to avoid a recession). §  No landing: it is possible that the US economy continues to be resilient, and inflation remains stubbornly high which means the Federal Reserve must hike rates higher for longer.US labour market is stubbornly robust The problem that the US central bank has (that the RBA doesn’t) is wage inflation is high at 4.6% over the year ended 28 February 2023. If it cannot cool the labour market and stop incomes rising, it probably won’t be able to return inflation to normal levels. The US labour market is proving to be very robust and although there are some signs that it is starting to slow, data is somewhat mixed. As reported late last week, the US unemployment rate did rise in February from 3.4% to 3.6% p.a., not because there were fewer jobs but because the participation rate increased (i.e., more people are attracted to return to the labour market and look for jobs). This helped the three-month annualised wage inflation rate slow to 3.6% (compared to the 12-month reading at 4.6%), so there are signs that wage growth is slowing. This is the most important issue that markets are watching. If we see more data that confirms wage inflation is slowing, a soft-landing scenario might be considered more likely. The other noteworthy difference inSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.

Ensuring your accountant collaborates with your financial advisor is important, as they will be able to discuss and workshop ideas to improve your financial position. However, in my 20+ years of experience, this collaboration almost never occurs, unless they work in the same firm. Theoretically, there shouldn’t be any impediments to these two professionals working together. Practically, it doesn’t happen and depending on the complexity of your situation, it could be costing you. Accountants and financial planners are different beastsIt is a common misconception that accounting and financial planning roles are similar. They are not. The roles are about as similar as dentist and doctors (general practitioners). Apart from knowledge and experience which can be vastly different, the next biggest difference is that accountants spend most of their time focusing on what happened over the past 12 months and sometimes on what might happen over the next 12 months. However, financial advisors are more focused on what will happen over the next 10+ years i.e., the medium to long term. This distinction is very important because the focus is habitual. That is, it’s not a natural tendency for accountants to think about what a client’s financial position might be 5 years from now. The truth is both approaches are complimentary. People would greatly benefit from both an accountants and financial advisors’ perspective. Be careful asking your accountant for financial advice It is natural to ask your accountant for financial advice. But there are a few important limitations to consider. Firstly, their advice will be shaped by their own experiences, which are likely to be limited, as they are not financial advisors. Accountants will often advise their clients to do what they have done for themselves such as simplistic advice like “if you are going to invest in shares, buy the big banks and miners”. But what might be appropriate for them won’t necessarily be appropriate for all their clients. Secondly, to give financial advice, you must be authorised under an Australian Financial Services license. Most accountants are not. Similarly, to provide tax advice you must be a Registered Tax Agent which most financial advisors are not. Why don’t financial advisors and accountants typically work well together? Of course, the reasons may be different in every situation, but I discuss some of the common reasons that I have obsSubscribe via www.investopoly.com.au/emailDo you have a question? Email: questions@investopoly.com.au or for a faster response, post a comment on the episode's video over on YouTube: https://www.youtube.com/@investopolypodcast/podcasts If you're interested in working with my team and me, discover how we can work together here: https://prosolution.com.au/prospective-client/If this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://www.prosolution.com.au/stay-connected/ Buy a one of Stuart's books for ONLY $20 including delivery. Use the discount code blog: https://prosolution.com.au/books/DOWNLOAD our 97-point financial health checklist here: https://prosolution.com.au/download-checklist/IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.