Smart money weekly; RBA rate rise & share market reaction, Apple to enter BNPL, and EOFY tax hacks

Ben Nash

Hey team,

Happy Monday.

Last week the RBA raised the official cash rate by the biggest jump in 22 years, meaning for the average mortgage holder you’ll soon start feeling an extra pinch on your repayments. Based on the NSW average mortgage in NSW of ~$850,000 this will increase monthly repayments by around $300 and mean extra interest of over $160k over a 30-year mortgage.

Off the back of this announcement, the Aussie share market started tanking and finished the week well down. And it sounds like more pain to come… The RBA has stated that inflation is predicted to still be higher than desired for the year ahead and therefore they may likely be raising rates again this year.This is good news for some and bad news for others. Now is the time to make sure you’re not stretched and have some give in your outgoings, the flip side is if you’re in the market for a property, in particular, Sydney or Melbourne. This change will well and truly start to properly cool the market and temper vendors’ expectations.

In the news: Tax trick to get a $1 million property for $8000 a year
Last week I put together some property hacks for on how to buy a $1 million investment property for just $8000 a year for it. Click here to read more.

Upcoming events:
The clock is ticking with EOFY almost here. We have some upcoming events focusing on minimising your current tax bill and starting the new financial year off on the right foot so you’re not in the same position again in 12 months. Check out the schedule below and register.

Event schedule and links to book here:

Share market wrap
Markets globally are in the red, as the world considers continued price hikes and oil prices. The financials index overall at the time of writing was down 7.2% with the big four banks in the red. Banks were losing ground as interest rates were hiked in Australia, which impacts lending.

Key sharemarket numbers:  

  • The ASX ‘All Ords’ (top 500 shares in Australia) finished the week -4.4% lower than last Friday, at 7,151.20 points.
  • The US ‘S&P 500’ (Top 500 shares in America) finished the week -2.91% lower than last week, at 4,017.82 points.
  • The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week -2.84 % lower than last week, at 11,754.23 points.
  • The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week -1.64% lower than last week (Friday AEDT) at 7,476.21 points.
  • The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 3,096.01 for the month, down -5.84% for the month to date

Investment story of the week: Apple Pay Later – what does it mean for the BNPL industry in Australia?
I’m taking a different take on this section this week after the news out of the US that Global technology powerhouse Apple has joined the flourishing “buy now, pay later” industry, with their service called Apple Pay Later. The announcement came earlier at the 2022 Worldwide Developers Conference, and will initially be launched in the United States towards the end of this year. The Pay Later service will be built into the Apple Wallet and eligible for use on any purchase made through Apple Pay. Users of Pay Later have the ability to split the cost of purchase into four equal payments, with zero interest and fees, spread over a period of four months. To qualify, however, Apple will first do a soft credit check on users wanting to use the service. Looking locally, the announcement has rattled the By Now Pay Later industry. For example, Zip Co Ltd (ASX: ZIP) dropped 6% after the announcement. Furthermore, as Apple already has a large audience using Apple Pay on a daily basis, it shouldn’t be too difficult for the company to market the service to its customers. Zip Co Ltd (ASX: ZIP, Sezzle inc (ASX: SZL), and others won’t have that luxury and will be forced to continue spending big bucks to promote their services to consumers.

Smart Money upside #73
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story is from one of our clients to help you take your money game to the next level.

Individual; late 30’s with income of approximately $140k. Total assets of approximately $800k and saving about $10K annually.

No clear insights into the future. No game plan to maximise the current position. The client had no confidence in money, and financial literacy levels aren’t where they could be.

What they wanted from us / the advice process
To make sure they could get on top of tax and have more confidence with money. The client also wanted to attain more financial literacy and have a better understanding of the ‘how and why when it comes to her finances.

What success looks like for them
Buy a bigger home, and have more long-term security with finances. The client wanted to be in control of her finances and know that she was on track to have a good level of income in retirement.

What money strategy they were following before we went through the planning process
No plan at all.

What money strategy they choose to pursue from our planning work
Purchase an investment property, update a superannuation fund, implement an appropriate banking structure, invest into an ethically driven portfolio and continue to build super nest egg before retirement through tax-friendly contributions. .

Key benefits of going through the process
Increased financial literacy, more confidence knowing where money is going and how it is being structured, better understanding of the complexities of tax around share plans and investments in general

Value of advice after all advice fees year one: $25k
Year 20 upside after advice fees: $2m

If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.

Giving update of the week
Last week we started working with an amazing business owner kicking a heap of goals and doing some great things in the community at the same time. Our conversations have reminded me of the power of business to change the lives of not only the people that work with any given business but also the broader community and the world at large. So to celebrate, we’ve provided one year of business training and an attached microloan for 20 women in Malawi. This is part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.

Money hack of the week: Formulating your ideal ethical portfolio
Stop for just a second. What environmental or social issues do you ACTUALLY care about? We sat down with ethical investor, Paul Garner, to discuss his formula for creating the ideal ethical portfolio for each of his clients. It comes down to assessing the issues you want to support, avoid, analyse further or ignore. Check out our full chat here.

Money mistake of the week: Why timing the market is a myth
True or false? You need a lot of money to start investing. Bow-bow, FALSE. I had a great chat with Alex Barrat from Stake about the biggest myths around investing in the stock market. We chatted about getting started in investing with as little as $50 and why it’s better to simply start rather than wait for the “right” time. Check out our full chat here.

Jargon Buster of the Week: Day Trading (via Canstar)
The process of buying and selling stocks within the same trading day. This process is often, though not always, carried out by professional traders.

Podcast from last week:  #172 How to set smart money goals [Live event w. General Assembly]
This podcast is a recording of a live session I did with the legends at the General Assembly on how to set smart goals with your money, create an action plan, and howto get started. Essentially, I talked through some of the key things for you to be aware of, so goal setting or not having clear goals doesn’t become a barrier to getting the results you want.

I also talk about the key mistakes that people make when it comes to setting goals and planning with their money, as well as a step, through an exercise that I’ve used with literally hundreds of people to get them crystal clear on the next steps that they can take to get.

Be awesome,


PS: If you want a hand to get on the front foot with your money in 2021, check out our 45-minute one-on-one sessions here. We’re donating 100% of the money raised to charity, so you can up your money game and do something good on the planet at the same time.

I know you’re smarter than someone that would need me to write the words that come next, but our compliance peeps are real hard-asses so here we go… This information is not personal advice, poetry, or a map to where Jimmy Hoffa is buried. It may only be regarded as general advice, and definitely shouldn’t be considered something worthy of inclusion for Donna Hay’s next cookbook or the Archibald prize. This is actually just an email communication that has been sent to a bunch of people and doesn’t even have your name on it. Your personal objectives, needs or financial situation have not been considered when preparing this email, but I want you to know that I have spent a lot of time thinking about the Venn diagram intersection of poetry, landscaping, and essential oils – if you’re fascinated by this same phenomenon please reply so we can compare notes. You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs, and if necessary, seek advice before acting on it. You should also consider other people when getting on and off public transport, smiling more, eating healthy, and listening to your mum when she tells you that you’ve been working too hard. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Where the information relates to a hilarious joke I’ve made, you should consider belly laughing deeply. Worth noting also that past performance is not a reliable indicator of future performance when it comes to investments, and definitely not when it comes to the Wallabies. Financial services guide. All jokes aside and just to be clear, this information may only be regarded as general advice. That is, your personal objectives, needs or financial situations were not considered when preparing it.  You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs, and if necessary, seek advice before acting on it. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Past performance is not a reliable indicator of future performance.