The BFG Report

Welcome to the 2019 Summer Edition of the BFG Report

Downsizer Contributions to Super
Since 1 July 2018, if you’re age 65 or over and sell your home, you can now contribute up to $300,000 into your super even if you’re currently restricted by other super rules. This is especially beneficial if you have retired and wish to downsize the family home and use the equity in your home to help fund your retirement. It can be a great opportunity and you don’t even need to buy another house with the proceeds of the sale.

How does it work?
You can use the money from the sale of your house to make a ‘downsizer contribution’ to super of up to
$300,000 for singles or $600,000 (combined) for a couple. This applies to anyone over 65 and you don’t need to meet the usual work test to make super contributions.

What types of properties are included?
The property must be located in Australia. It doesn’t need to be your current home – it can be your, or your partner’s, former home as long as you or your partner have owned it for more than 10 years and lived in it at some point. An investment property that neither of you have lived in is not eligible. Also, the property does not need to be owned by both members of a couple for both of you to make a contribution of up to $300,000 each to your super. Unfortunately, the sale proceeds from a houseboat, caravan or mobile home cannot be used.

Who is eligible?
You are eligible to take advantage of this scheme if you are age 65 or over. Unlike non-concessional contributions, the good news is that you don’t need to be working and there are no upper age limits to making downsizer contributions. Also, the current total super balance test of $1.6 million and the $100,000 non-concessional contributions cap restrictions don’t apply which makes it a great option if you want to contribute more to super and are currently ineligible because of these restrictions. You can only make a downsizer contribution from the sale of one home and the contribution must be made within 90 days of receiving the proceeds of the sale.

One benefit of making a downsizer contribution and investing your money in super is the potential tax savings. That is, when you draw down on your super as an account-based pension you do not pay tax on investment earnings, on amounts up to $1.6 million.

Please note: If your family home is currently exempt from the Centrelink assets test and you sell it and put the proceeds into super — your age pension entitlement could be affected.


Investment Market Review – Quarter Ended 30 September 2019

Australian Shares

The S&P/ASX 300 Accumulation Index underperformed global markets in the September quarter, rising 2.6%. Most sectors had positive returns with the exception of mining (down 5.5%) and Telecommunications (down 5%). This was driven in part by the poor performance of Rio Tinto (ASX: RIO) and BHP Billiton (ASX: BHP), as both companies were heavily impacted by the falling iron ore price. Low demand for base metals, due to US and China trade tensions, disadvantaged South32 (ASX: S32), a Western Australian mining and metals company.

Australian Shares

1 Year is 12.6%

5 Years is 9.5%

10 Years is 8.0%

Listed Property Trusts

The Australian real estate investment trust (A-REIT) sector produced a return of only 1.1% during the September quarter. Real estate investment companies, Goodman (ASX: GMG) and Dexus (ASX: DXS) were primarily responsible for the relatively weak performance during the quarter. While earnings for both companies during the 2018/19 financial year were slightly above expectations, the outlook for both of them meant analysts have lowered their expectations for the 2019/20 and 2020/21 financial years.

Listed Property Trusts

1 year is 18.4%

5 Years is 13.8%

10 Years is 11.1%

International Shares

Global markets had a strong quarter with the MSCI World Index in Australian dollar terms recording a gain of 4.6% during the quarter. Globally, most share markets rose during the quarter led by positive returns during July and September which offset weak performance in August. The global rally was led by bond proxy sectors, that tend to offer predictable returns – such as utilities, real estate and consumer staples, because they benefited from two rate cuts by the US Federal Reserve and a further cut by the European Central Bank. The Australian dollar weakened during the quarter which supported unhedged global equity returns. Key drivers included falling interest rates (making holding the Australian dollar less attractive) and a decline in iron ore prices due to increased iron ore supply.

International Shares

1 Year is 9.2%

5 Years is 12.9%

10 Years is 12.0%

Fixed Interest

Australian and global bond yields fell further during the quarter with the AusBond Composite rising 2%.
In Australia, weak economic growth continued. Poor consumer and business confidence, as measured by Westpac and NAB surveys respectively, points to further weak economic growth ahead. While inflation rose slightly by 0.6% during the June 2019 quarter (reported in July), on an annual basis it was only 1.6%.

Fixed Interest

1 Year is 11.1%

5 Years is 5.3%

10 Years is 6.0%


The RBA’s outlook for the economy continues to be driven by concerns over slowing economic growth and their view that rate cuts can continue to support lower unemployment without increasing inflation. RBA rate cuts have different impacts across the economy. Some groups and areas benefit while others are disadvantaged. Borrowers benefit because lower interest rates, provided they are passed on by the banks, reduce mortgage repayments and improve borrower spending. Savers are disadvantaged because they receive less interest income. This affects retirees and people with large amounts of cash held in bank accounts or conservative investment portfolios.


1 Year is 1.7%

5 Years is 2.0%

10 Years is 2.9%

High Yielding Internet Savings Accounts

Financial Institution Interest Rate**                                                                

RaboDirect Bank 2.50% p.a.

ME Bank Online Saver 2.05% p.a.

Citi Online Saver 2.30% p.a.

ING Savings Maximiser 1.95% p.a.

Rams Saver 2.00% p.a.

St George – Maxi Saver 1.80% p.a

* Rates are subject to conditions and change. Rates are correct as at 05/12/2019.

Important Note – The BFG Report is published for your interest and every effort is made to ensure it is accurate and contains general securities advice only. It is not possible, when preparing The BFG Report, to take into account individual clients’ investment objectives, circumstances and needs. Before acting on any information or advice contained, expressly or implicitly, in The BFG Report you should consult a Representative of Baldry Financial Services Pty Ltd trading as BFG Financial Services (“BFG”).
No part of The BFG Report may be reproduced without the written consent of BFG in each case. BFG, its employees or any associate are not liable for any loss or damage arising as a result of any reliance placed on the contents of The BFG Report. All such liability is excluded apart from any liability which the law does not allow to be excluded.