Now on afternoons All Things Finance with Blake went from Pretzel Wealth. Organize your free consultation at Pretzelwealth dot com dot au.
Well, there may be a curfew in downtown LA, but there's no curfew here. If you've got a question about your personal finances. The best in the business Blake went is here with us from Pretzel Wealth. Of course, Areo Blake Michael. Now, all sorts of things in the world of finance. But I mean the stock market's nudging record highs here a Wall Street seems to be back to
basically where it was. But as you were saying during the break there, the big Beautiful Bill Love a bit of a literation that, depending how that goes, will have an impact on where the stock market's land.
Right, Yeah, certainly, big beautiful Bill. That's our next hurdle. So you know, it's Trump's baby, offering tax cuts, incentives, increasing the debt, sealing, all this sort of stuff is coming through if that bill passes. Now, if it passes, the question is, okay, when does America get their act together and start raining in the spending and reducing I suppose their debt, because if you're extending the debt ceiling
over there. Well, it's assumed that you're going to go up to that debt ceiling and take on more and have higher levels of borrowing. And you know, we're still at a still in an era where interest rates are quite high over in America, so that could be quite inflationary for them. Interest rates from the perspective of bond markets and debt markets, those interest rates may increase, which causes concerns because if you're taking on more debts at a higher cost via the interest rates, then.
The world starts a.
Look at American think, well, hang on a minute, you're becoming the quality of your debt is less credible, and so it will cause some concern for markets. Markets if interest rates are moving high, there's tighter you know, there's concerns for businesses if they're borrowing to try to feel their expansion. And so it's not a great outcome if it passes unless they can produce income or increase income, which is Trump sort of saying, well, we want to do that through tariffs.
We want to get some income that way. If it doesn't.
Pass, well, taxes are elevated, and so that's not great for consumers because consumers have less money to spend, and so businesses suffer.
So he's sort of saying they're damned if they do, and they damned if they don't.
To some degree, yes, exactly, so they want it to pass because it gives them more flexibility to spend money and get money passing through the economy. But at the same time, if it doesn't pass, well.
Okay, what do we do with the debt problem? It's damned if that.
This is it. I mean, as people know listening to me, I've been speaking about the American debt problem for a long time, but it's only getting worse. And it got a lot worse under Biden. Under Trump, it's going to get worse. I don't think the tariff's is going to bring in anywhere near as much as they claim, and because the tariffs are essentially paid for by the American consumer, I mean at the end of the day, So again that siphons money out of the economy gives it to
the government. So they are at a bind in America.
They are.
It's tough.
It's tough, and so you know, because they're such a large economy. If they're getting weaker or there's flowering effects around the world, and so we've just got our eyes on this big beautiful bill seeing how it goes, and it could go either way.
Okay, yeah, I mean politically. I was watching bit of Bill O Riley last night and he made a very valid point that. Okay, let's say the Senate does not approve because the House any approved by one vote. Two Republicans win against it, so it only just got through the Senate. Let's say some of the conservative Republicans are
too much spending, we bot this down. As you say, the deductibility, I think fifty percent of deductibility automatically is wiped away two and a half percent across the board. Increase on income tax or that's the average or something. Recession likely to hit midterm elections next year, the Republicans will lose. Trump will be a lame duck. So you end up with about two years of just nothing productive happening in Washington, which is again bad for the economy.
So everywhere you try to turn to pivot out of this, there are roadblocks.
It's tough, tough times over there, and that does have impacts on market. So whilst the market is doing quite well at the moment, it's recovering from the sell off that occurred off the back of Liberation Day and Trump's tariff's being introduced to the world. Markets have calmed down from there. They've recovered, which is great to see. But again it's about saying, okay, well what's ahead of us. Well, we've got this decision that needs to be made and
the outcome may not be so great for markets. Now, you don't go off and sew your portfolio down. You just analyze what comes through, make a rational decision, and then go from them.
Like that analogy. I You've just gone over the mountain and you realize there's a lot more of the alps yet to climb, and they're higher again than it's That's right, okay, one three, one eight seven three. Let's get to some questions. Gary's phone in, can I Gary? What's your question for Blake?
Yes, good, phon. I'm just wondering if a couple leave, as part of a will a home to their child, but then also a man to each grandchild. So let's say, for instance, the pull home and then one hundred thousand dollars or whatever to each grandchild. If the sun decides to move into the family home and pay that a man to the grandchildren. Does that come off his allowance that he's allowed to have before his pension? So is that classes like income that he should really have.
So the situation you're transferring as part of the estate, transferring your home to a child and they're going to pay rent, that is that what's happening.
No, No, what it is is that the home was to go like this child and also a number of grandchildren get a man of money each. If the son wants to live in the family home and pay the money to each of their children who are my grandchildren, would that be considered like an asset that he has that he's not Yes, so he hasn't used for pension.
Yeah, for sendling purposes. So if the funds were to go to the child and then they do something with those moneies after then so distribute it to their children or nieces nephews, then that's considered a gift on their side, and so it can impact or it does get included. I suppose there's an asset potentially for age pension purposes or sendling purposes.
One way to get around that might.
Be to distribute money is to the grandchildren directly and so perhaps you need to think about if the grandchildren under the age of eighteen, who's going to look after the money? Is it in trust for them? How does that all work? So speak to a solicitor about this. But maybe it's best to send the money or direct
the money to the grandchildren. Doesn't go to the child receiving the property as well, and so if they move into If the child moves into the home, it's classed as their main residence, so it's not picked up for Sentillink purposes, but worthwhile having a chat with the solicitor just to see what the family dynamics look like. Raise any concerns if you're worried about the estate being contested, speak to them about some of those concerns. But for
Sennelling purposes. If the child receives everything and then they decide to distribute money themselves cash to the grandchildren, then perhaps there would be some issues with the asset.
Test and gifting rules.
So just get some advice around this, understand the whole family structure, and then make a decision from them.
Yeah, so financiers and loyals and equal measure, I think they will, I think so. Yeah, all right, Gary thank you. Good question, no doubt, one that is being mulled by a number of people as we speak. Blake went hear from Prenzl Wealth, of course, and you can book a complimentary consultation with Blake today. Do it Pretzelwealth dot com dot au Blake. The total super balance cap that's changing. What's happening?
Yeah, so that's going to increase to two million dollars that This is sort of old news, I suppose, but it's something relevant for endo financial year planning because if you're getting close to that one point nine million dollar total superbalance cap which is currently in place, it's going to two million. Maybe you're thinking, well, I'm at an age where I can access my super and potentially do some recontributions. Recontributions are effective for cleaning up death taxes
in super. So if you leave money or superannuation to kids, non financial dependents, they may pay a fifteen percent tax on your superannuation.
So we want to try to clean that up.
Now, if you're around that one point nine mark, and we've seen a couple of clients last week sort of ad that threshold, one thing to think about is okay, well guess we could recontribute hundred and twenty thousand dollars this year, So pull the money's out, put them back in. Great off we go, possibly do it next financial year. But if we're if we're too far, very close to that total superbalance cap coming into the new year, we might not be able to contribute as much as what
we could. If we sort of put some planning in place and say, well, how do we reduce this total super balance amount? So inside of super you may want to withdraw sufficient funds this side of the financial year. Possibly pull out your four hundred and eighty thousand dollars, recontribute one twenty this year, keep your superbalance below or low enough to be able to put in another three
hundred and sixty next financial year. And by doing that, possibly you're getting or you're recontributing another two hundred and forty thousand. Why does that matam, Well, if you're paying fifteen percent tax on that children and forty thousand dollars, Well there's three thirty six thousand dollars that you're going to save for the kids. Now you get no benefit whatsoever, but the kids may benefit from it. So just encouraging you know, we're heading into the end of financial year.
If you're thinking about recontributing, you're up at the total superbalance cap. Maybe it makes sense to get some advice around this, pull out larger amounts, wait till July when that rolls around, and then get larger amounts back in. But total superbalances are a thing. You're effectively unable to put money into super if you exceed two million dollars.
The total super balance also.
Impacts your ability to look back over previous financial years make tax deductible contributions, and potentially, if your superbalance is less than three hundred thousand, you may get a work test exemption, which can be quite valuable for those who have taxable income. But they've finished up work this financial year and next year they want to get a tax deduction. So think about there. Get some advice before you do anything.
Of course, make sure you're doing the right implementing the right strategies, and you're not doing yourself any harm.
Okay, just tell me this because I'm a simple person with financial matters. As you know, the total super balance cap will be two million, yes, and yet we're talking here about people with three million dollars and more in their Super that could be targeted by this other government idea. How do people get to that point?
How do they get to that point?
Well, they've already put the money into Super and they've they've possibly already have that money sitting inside of Super. So the two million dollars or started off I think back in twenty seventeen where the limit was one point six million.
Before that, there was no limit before.
That, no limit, no, so you could get large amounts into Super and off you go. But those with balances of three million dollars or more, they've either experienced some pretty strong investment returns. A few clients of ours have dabbled in bitcoin themselves, not through our advice but on their own, so and they've taken that risk and they've seen pretty good return through Super through Super, that's right. So they've had to have a self managed super funds,
they've invested in bitcoin and done well. Now we wouldn't advise that because of the risks involved, very volatile.
So theoretically, sorry to cut short, sooretically they might have had one point three million in their Super account. They've give me a couple hundred thousand a bitcoin. They still will under the two million but that's just gone like topsy, So now they're whale over three yes, and they're just a victim.
Of their success exactly right, which is not something to be upset about. I mean, yes, you're above and so yes there may be this tax if it comes into playing or when it comes into playing, and so that that's going to be effected. So yeah, people have already got the money into super it's grown. That's why you're above three million. It's not by putting extra contributions in in the last couple of years because you have been limited.
Good to speak as always, Thank you, Blake, and we'll catch the same time next week.
So you there.
Blake went from Pretzel, remember that complementary consultation pretzelwealth dot com dot are you