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At a recent speaking engagement a member of the audience asked me a question. He had recently received $50,000 (he didn’t tell me how) and wanted to know what he should do with it.
When it comes to money, we’re used to hearing “I don't have enough”, but what about the people who do have some money? What should they be doing with it? What are their options?
If you were handed $50,000 today, what would you do with it?
In my opinion, you should always pay off debt as your number one priority.
Start with your 'bad debt' – credit cards, high interest loans and store finance cards.
This kind of debt can be costing you between 15% and 25% per annum on your outstanding balance.
An average working person’s consumer credit facilities could be costing hundreds each month in interest charges, while the capital amount remains, creating a payment for next month.
Once you’ve attended to the high interest consumer <a href="/news">debt</a>, look to your 'good debt' such as a mortgage.
Putting lump sums into your mortgage can significantly speed the pay-out of the loan, savings you tens of thousands of dollars over the years you carry this debt (look at any online calculator). It’s also tax effective in that most people pay no capital gains tax on their primary residence when they sell.
Once debt is tamed, you should look at using a lump sum to make a return. This starts with an assessment of your risk profile given your life stage.
A good option right now is shares – they are on the rise after several years of poor performance. However, the share market is volatile, so you need to be in a position to roll with the ups and downs, which means being invested for the medium-to long term. Stick to shares in businesses that are stable and consistent rather than speculative companies that may or may not succeed.
A second option, especially for younger people in employment, is to put it towards a deposit on a <a target="_blank" href="/news">property</a>.
So long as you can afford to service the loan, there are benefits to buying a house: you can live in it, you can rent it out and if you buy well you should enjoy capital gains as it increases in value. It would be a great first investment.
Even though property is less risky than shares it’s always a long-term investment so be prepared to hold on for 7-10 years.
And don't forget super. The tax benefits of superannuation are significant, but remember it will be locked away, unable to be used until retirement.
You should strive to have some money in cash in case of an emergency, but also in an account that makes a return above inflation (e.g. high interest savings accounts, active cash funds).
Lastly, always remember that a lump sum of money must work for you: it should be returning growth or income, so you build something for the future; or it should be reducing what debt you have now.
Either way, a windfall is not something that should go to waste.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" rel="nofollow" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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A windfall is not something that should go to waste: Mark Bouris

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Large measurements such as inflation, employment and balance of trade are important indicators of economic wellbeing, but economies come down to households having enough confidence to commit to property purchases.
I’ve been keeping my eyes on property markets for the last two years, wondering when we would break out of the spiral of low confidence, a withdrawal from property and the consequential flattening of property values.
In the past week we’ve seen a couple of flickers of a revival.
In the latest Australian Bureau of Statistics figures, the total value of dwelling commitments (excluding renovations) rose 0.6% in January over December.
It’s a modest shift, but it’s in the right direction.
More dramatic is the RP Data-Rismark Home Value Index, which found that five of Australia’s eight capital cities experienced house value rises in February.
The eight capital cities’ average house values rose 0.3%, following on an eight-city rise of 1.2% in January. Canberra house values rose 1.9%, Melbourne by 1.5% and Sydney had a 0.1% rise.
RP Data singled out Melbourne: because it’s Australia’s second biggest property market, it pulled up the research company’s index. It’s a good sign.
A few rises in house prices does not make me totally relaxed. We also have to find evidence of renewed consumer confidence.
This week I found such evidence with the release of the The Westpac-Melbourne Institute Index of Consumer Sentiment, which rose 2.0% in March and produced the highest confidence figure in that index for two years.
Could it be that Aussies are waking up to the fact that credit is cheap right now?
Interest rates began their drop in November 2011, so we’ve had slightly more than a year of lowering interest rates to make people rethink their financial commitments and to reassess the property market.
There’s no cause for breaking out the champagne just yet. But from my perspective, it’s looking like a very good time to buy property with a home loan.
Property has only just started its revival, meaning it’s coming off a low base in most parts of Australia and is still largely a buyer’s market. Also, interest rates are at historic lows – the cash rate was at 3.0% in those middle months of 2009, but other than that, we have the lowest cash rate since 1996.
With employment still looking strong and inflation low and stable, it’s an excellent time to buy property.
Also, the cost of funds to mortgage lenders is easing this year, so this isn’t just a good time to raise a new mortgage and buy the dream. It’s also a good environment to ask your current lender for a better deal.
There are no free lunches with property. As I tell people, you have to do your homework, buy well, borrow smart and remember that property makes its greatest sense when held for at least ten years.
Good luck.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" rel="nofollow" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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It’s looking like a very good time to buy property with a home loan: Mark Bouris

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Every economy has cycles and we may be approaching the end of one that has been good for mortgage holders.
For more than two years the cash rate – the benchmark for variable mortgage rates – has been falling, from November 2010 when it was 4.75%, to the current 3.0%.
This past week, the RBA held the cash rate at 3.0% and the markets are expecting the local and global economy to pick up slightly which will keep rates steady and perhaps bring some rate rises before the end of this year.
I don’t follow market expectations too religiously, but you get the idea: 3.0% is as low as we’ll probably get this time around.
While the economy has been finding its feet, another factor has emerged. The banks’ cost of sourcing funds from the capital markets has eased.
This is an interesting confluence of forces, because it means as the cash rate rises, it may not hurt mortgage borrowers as much as it should; and with funds relatively available from wholesale sources, the banks won’t have to offer premium yields on cash deposits in order to attract those funds.
Regardless of how this plays out, rising interest rates affect people in different ways.
Firstly, people relying on cash investments should be shopping for institutions who stay in step with cash rate rises.
This is crucial, because with a resurgent economy also comes inflation, and rising inflation is the enemy of cash investors.
Those who need to retain cash as their core investment should keep their money in the best-yielding term deposits and cash accounts, while also looking at bonds and dividend yielding (conservative) shares as a way of keeping their risk low and returns relatively high.
Simply sticking to ‘safe’ cash ignores the danger that inflation takes your gains.
Secondly, if interest rates rise this year, but bank funding costs also ease, this year mortgage borrowers should be alive to the prospect of refinancing.
There’s already a daily spread of around 1% between variable rate mortgages, which represents a difference on a $250,000 loan of around $140 per month.
As cheaper funding comes back into the Australian lending system while mortgage rates rise, this spread between lenders will probably become wider as lenders position themselves for market share and the incumbents try to stop inroads into their customers. Stay open to deals.
Thirdly, if we do see a couple of rate rises later in the year, business borrowers must stay vigilant about their interest rates and loan security.
It can be difficult researching how much you should pay for business credit, because all sorts of deals are done that mean you can’t always compare apples with apples.
One way to ensure you’re not paying too much is to use a finance broker who stands in the market for you and who knows what other business owners are paying.
Lastly, remember this: you can’t beat the cycle, but by staying informed and being prepared to act, you can profit from it.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" rel="nofollow" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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You can't beat the cycle, but you can profit from it: Mark Bouris

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Competition assumes you will spend where the lowest price and best product offering come together, but competition has taken a strange turn in bank mortgages.
The global investment bank, UBS, released its report into the Australian mortgage market a week ago and found that the banks were earning more profit on mortgages (0.88 per cent after-tax) than at any time since 2004.
This is happening in part because the cost of banks’ wholesale funds is the lowest they have been for five years.
So, if it’s cheaper to provide a home loan, why aren’t the rates dropping?
Well, in many cases the rates are dropping – just not at the Big Four banks.
Have a look at a comparison site such as <a href="https://www.ratecity.com.au/" target="_blank">RateCity</a>, where the major banks’ standard variable rate loans are generally the most expensive on offer and the most reasonably priced loans are offered by credit unions, non-bank lenders and building societies.
The difference between RateCity’s lowest and highest variable rate is 1.91 percentage points, yielding a difference in monthly repayments for a $300,000 loan (with a 30-year term) of $369 per month. That’s $4,428 per year or $132,840 over 30 years.
Yet about 90% of all new mortgages are written by the 'Big Four'.
Economists call this an oligopoly – the monopoly of many.
To create an oligopoly, you need to be selling something that everyone wants and you also need high barriers to entry, which discourages new entrants to the market. In an oligopoly, the participants don’t compete on price and product as much as they ‘match’ one another.
This is the current situation, but 2013 could be a year of change. The fact that UBS sees the banks profiting from the average Australian mortgage and predicts the market is due for a shake-up suggests the capital markets see room for a correction.
I also note the formation of the Bank Reform Party, which will contest this year’s federal election. The party has a platform of competition and consumer protection and wants to challenge the illusion of competition created when big banks operate behind brands such as St George and BankWest.
But the most important factor in competition is the consumer’s actions. So even though I – and others – predict strong competition in the mortgage market this year, reaping the benefits requires that people actively chase the best rates. This can mean switching to a lower-priced lender, or renegotiating your current loan – something most loan managers will do if they believe you will switch.
Mortgages can be emotional products, because the loan relates to your home.
But if you can see this loan as a monthly cost – similar to phone plans, car finance and internet deals – you free yourself to find the deal that’s best for you.
Mortgages are a commodity and there is no such thing as a designer mortgage or Armani dollars. All that matters is the best deal.
And remember: consumers drive competition, but only if they act.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" rel="nofollow" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Consumers drive competition, but only if they act: Mark Bouris

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After<a href="https://www.propertyobserver.com.au/trends/australians-are-not-saving-enough-for-retirement/2013021759365" target="_blank"> last week’s column</a> where I asked for your thoughts on why there’s so little engagement with superannuation, I got a lot of responses, and the clear message that comes through is one of ownership and confidence.
Firstly, because the superannuation guarantee is siphoned off from an employee’s pay packet – into a superannuation account – Australians have little sense of ownership. It feels like a tax; it feels like something the government takes rather than something that employees actually own.
Secondly, those who responded made the emphatic point that it’s hard to have confidence in a system that’s supposed to be our long-term retirement savings but is seen as a short-term proposition by governments. "Stop changing the rules" seems to be the clear signal to governments.
Moreover, there are deeper problems in retirement savings, as I discovered this week when I found myself in a small group of high-achieving people whose ages ran from 25 to 74.
As we spoke it became apparent that superannuation was as hard to engage with in this group as with any. In other words, a general disengagement from super is as prevalent in high achievers as it is for anyone, and in all age groups.
The younger people I was speaking with were embarrassed that they weren’t more interested – none of them felt they had a good grasp on planning for their future. The more mature folks admitted they only became interested on the verge of retirement and urged the youngsters to become interested now. The people in between – in their 40s – were pushing to do the best they could with the time they had left.
Interestingly, among these high earners, the ones who didn’t have an adviser had no little knowledge about how to find one, or more importantly, how to find one who they could trust.
In my mind, the most important part of retirement planning is to take the responsibility and to take action. Responsibility and action.
Once you’ve established these two things, you don’t have to leap further into super if it doesn’t make sense to you. There are other ways to provide for retirement, such as share portfolios, building a business and investing in property.
I happen to think that the tax benefits and security of superannuation is a compelling reason to use this system, especially since the law requires a certain amount of your income is invested in super anyway.
Nevertheless, the important thing is to accept that it’s your responsibility to provide for your retirement, and with life expectancies increasing, you should be looking at providing for 30 years of living rather than 20.
And having taken this responsibility – your money, your retirement, your investments – then you have to take action: find an adviser, establish what you need to do, and do it.
Don’t be embarrassed. Embarrassment makes people duck the obvious questions and avoid making decisions. Embarrassment makes people procrastinate and that’s no way to approach retirement planning.
It’s your retirement, and it’s your money. So, be active, be responsible and take action before it’s too late.
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance. 
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Don't be afraid to ask the obvious super questions: Mark Bouris

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Australians are not saving enough for a self-funded retirement. Or should I say, they are not putting away enough now to live at the standard they want to live at in retirement.
Superannuation has been in the news lately because the government is tinkering with super. But poor savings rates for retirement can’t be all the fault of government. Superannuation – when introduced in 1992 – broke the rules that said governments and employers carried the burden for funding our retirements. It shifted private retirement savings from a “defined benefit” system (where the employee is promised a certain amount at retirement by the employer) to a defined contribution system, where every employee has to have 9% of earnings put in a superannuation fund.
This shifted responsibility and risk to the individual, many of whom lacked the skills to do it. But there also came with this system empowerment and individual choice for Australians, younger generations in particular, who would have an entire working life to build their savings.
So the fact that few young Australians are optimising this tax-friendly retirement system with top-ups to their employer contributions is an interesting story.
Why are young Australians not engaged with their super? And when I say young, I mean people from their 20s to 30s – people who are out of school and working.
I don’t think this is about whether the super guarantee is 9% or 12 or 15. If people aren’t embracing it at 9% they won’t be any more interested when it’s higher.
I decided to use Twitter to see what people were thinking about retirement, and two clear strands of thinking came back. Firstly, we have a system where all the burden falls on people to make the right decisions, but no one seems to be teaching basic investment strategy in high schools.
While teachers will understandably groan at adding one more thing to an already crowded curriculum, there really has to be an investment primer for teenagers before they join the work force.
The second point concerns modern life: when you get into the phase that brings kids, mortgages and/or career ambition, the last thing you are thinking about is topping up your super and devising a retirement strategy.
A number of respondents simply said that with a mortgage and kids, are you kidding about super?
Which is the nut we have to crack: we need people to top up their super when they’re at their highest earning years in order to provide the income they need to live well in retirement. But for most people these years overlap with mortgages and kids while the cost of living is rising.
There are no easy answers but I will go back to basics and remind everyone that super is their money and it’s their retirement. It’s never too late to become informed and active about super. You may thank yourself for it one day.
I would love to know your thoughts. <a href="https://www.twitter.com/@markbouris" target="_blank">Talk to me on Twitter</a>.
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Australians are not saving enough for retirement

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Since the GFC, money has been flowing to bank deposits. That is, low-risk, low return options where the saver has an element of "government guarantee" and money is either on hand or has a fixed return for a fixed term.
The move to cash has been at the expense of investment in shares. The market capitalisation of Australian equities in June 2007 was $1.59 trillion, and by June 2012 it had fallen to $1.18 trillion.
Correspondingly, total term deposits with Australian banks equaled $196.2 billion in June 2007, rising to $533.5 billion in June 2012.
There are signs that the market is warming again to the share markets. Should you join this trend?
There are three considerations: your goals, your timeframe and your risk tolerance.
A goal – for instance, to save for retirement – will tell you how much you need to save and how much your savings must earn. Large goals need the compounding effect of high yields over the long term, whereas small goals don’t need so much planning.
Your timeframe also dictates where you put your money. Bank deposits are useful for short-term goals because they allow ready access and they are government guaranteed.
Shares favour the long term. They are a good investment for young savers or those in mid-life cycle because the performance of shares is best measured over a decade.
This is where appetite for risk comes in. Over the past decade, Australian shares returned 9.1%, compared with the performance of cash at 5.4%.
However, in any year – or any week – of the 10-year performance of shares, the value of what you own can fluctuate, sometimes wildly. So you need to weather the ups and downs over a long cycle in order to get your 9%.
If your retirement falls in a month where the share market takes a significant downturn, and you rely on shares, you’ll have to wait for a market correction.
This is not an either/or argument. Strong investment portfolios are diversified, and operate as a matrix in how they deal with goals, timeframes and risk appetite. This usually means they have a mix of cash, shares, property and bonds.
Younger people aiming for a large retirement nest egg should weight their investments towards equities and property, and those approaching retirement should favour having a paid-out property and a weighting to cash investments because they don’t have the time to reverse any losses on shares.
One of the warnings I would give to those who want to shut out all risk, is that economies change and so do opportunities. My team at YBR is currently concerned about the chance that long-term interest rates will rise over the next two years, caused by economic growth and a return to consumer confidence.
If this happens, how many conservative investors will have money locked away in fixed-rate bonds? They’ll be losing out while owners of shares, bank deposits and floating rate bonds enjoy higher interest rates as economies expand.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Why you should have property, shares and cash in your investment portfolio: Mark Bouris

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This election year I would like to see banking competition finally addressed. Lending is too heavily concentrated in the hands of the four majors, which are 'too big to fail', with profits and pay packets underwritten by taxpayers at the expense of choice. 
Last year the International Monetary Fund (IMF) arrived at two key conclusions: that Australia has one of the most concentrated banking systems in the world, giving us a banking 'oligopoly' (or four monopolies). Second, that this oligopoly is a raw deal for the taxpayers who back it. 
I've consistently questioned the idea that we are better off being serviced by four mega banks that can never be allowed to fail than a higher number of mid-sized banks that don't suffer from the "heads we win, tails taxpayers lose" mentality. 
The majors are now among the 20 largest banks on earth. This means CBA, with a market capitalisation of $100 billion, is now bigger than McDonald's and American Express. 
While bank funding costs have plummeted over the last six months, the majors did not fully pass on the RBA's last two rate cuts to borrowers. 
If you had an online bank deposit or standard savings account your rates were slashed by as much, if not more, than the RBA's cuts. That's called margin expansion. 
The IMF found that the majors benefit from implicit taxpayer insurance whereby they can raise money more cheaply than smaller competitors because investors assume the government will be there to bail them out if they get into strife.
 The IMF argued the majors should hold extra capital (or reduced leverage) to lower the risk that reckless lending results in taxpayer guarantees coming back into play. 
In thinking about Australia's banking competition crisis, I believe the global "regulator of bank regulators", the Basel Committee, has come across a solution. 
To meet their cash needs during a funding crisis, the Basel Committee recommends that all banks hold more high-quality assets that can be pledged or sold in exchange for money. 
These include government bonds and AAA-rated "asset-backed" bonds. Most asset-backed bonds are simply portfolios made up of billions of dollars of our home loans. 
Smaller players like Bank of Queensland sell asset-backed bonds to raise new money to compete with the majors. The attraction is that the price of the bond is generally the same for everybody and depends primarily on the quality of the loans. 
If all banks are allowed to hold these bonds as part of a liquid assets portfolio, demand and activity for them will increase. This will improve the cost and accessibility of this funding source. 
I hope local regulators embrace these recommendations. They have instead championed the principle that banks should borrow directly from taxpayers when they need cash. This strikes me as odd: taxpayer bailouts should be our last line of defence. It is also surprising because the assets that secure taxpayer loans are the same ones used in asset-backed bonds! 
What do you think?<a href="https://twitter.com/markbouris" target="_blank"> Talk to me on Twitter</a> 
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Oligopoly of the big four banks a raw deal for taxpayers: Mark Bouris

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Now is a good time to become a landlord, but you must do it properly
I suggest a serious look at investing in property and renting it out to tenants.
There are several reasons for this outlook, including soft house prices, strong rental demand and the prospect of solid total returns.
You ideally want to buy the property at a time when real estate is in the downturn phase of its cycle, you want to rent it out when rental demand is high, and these two factors should come together to produce a total return that not only beats inflation but also compares favourably with alternative investments.
One of the first rules of buying property is that you must not overpay. This is important for two reasons: firstly, you don’t want your income from the property being overshadowed by high mortgage repayments; and secondly, capital growth in the property is as important as the monthly cashflow from rental income, and you will enjoy greater capital gains when you buy the property for a lower price.
With property prices having been flat or going backwards for two years, it seems like a good time to buy.
Property can also be looked at in terms of affordability, and affordability is attractive for investors right now.
Rismark says disposable incomes per household have risen about 15% further than capital city dwelling values since the end of 2003.
When many people buy investment properties, they simply want to buy the cheapest place they can find and rent it for the highest rent they can charge. I advise potential landlords to hold out for a property that is in a sought-after area, close to shops, transport and schools.
There is no point having a rental property that you can afford when no one wants to pay you to live in it.
Then you have to look at rental demand because when you buy an investment property, you are going into business as a landlord.
On this score, there’s some good news for property investors. Weekly rents across the capital cities rose 1% over the December 2011 quarter and are 6.3% higher than at the same time last year.
This suggests rental demand is exceeding supply, which is good for landlords. Anecdotally, you hear stories of people queuing to see the good properties and offering to pay more rent than advertised to secure the property.
While this is a good result financially, it’s also a benefit in terms of tenant management. One of the biggest headaches for a landlord is a bad tenant, but when demand is strong you don’t have to take the first applicant. You can pick the tenant who is best suited to your property and who has the best record.
If you feel you can buy cheaply in the current property market and you can take advantage of the strong rental demand, then you have to think about your total return.
As a final hint to first time property investors, I would urge you to take professional advice before entering into this: consult a solicitor or accountant about your tax position as a landlord, use an insurance broker to get the right insurances, and spend some time finding the right property management company.
It’s a good time to be a landlord, but only if you do it properly.
 
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A smart savings portfolio comprises property, bonds, bank accounts and term deposits
These last few years have been confusing for Australians thinking about retirement: when they look at what the experts have done with their money, they see it going backwards, or growing very slowly.
The 2010-11 APRA figures over the decade to June 2011 show that the average return in large super funds was 3.8%per year. That was the overall average: retail funds earned just 2.9%. After accounting for inflation, which has averaged about 3% over the same period, savers have received little-to-no “real” return.
One of the standard “expert” remarks about investing is that you have to skew your super to higher-returning equities, or you won’t have enough to retire on. But global shares suffered 40-50% losses in 1987, 2001, and again in 2007-08.
The other extreme is to ask you to accept very low returns on your money for little or no risk.
I believe in a “middle way” solution: a portfolio comprising a mix of short-term bank accounts and term deposits combined with variable rate bonds.
By diversifying your portfolio across these investments, the risk you are taking is not much higher than cash and much lower than equities – while receiving very attractive returns.
Many big fund managers and most financial planners do not steer their clients into these products. While many offer bond-based products, when you select the ‘default’ setting in your super fund, you are normally placed in a “balanced fund”, which typically gives you a total exposure to cash and bonds of not much more than 10%.
In other words, the super option most Australians are in – “balanced” – will have you about 80% to 90% exposed to Australian shares, global shares, and “equity” risk in commercial property, private companies, and hedge funds.
Recently, one of our branch principals at Yellow Brick Road dealt with a retiree in Queensland with $800,000 in a bank account, earning less than 2% per annum. By putting his cash into a portfolio that exposed him to both institutional bank accounts and variable-rate Australian bank bonds, this retiree will now earn an extra $25,000 per annum.
Another case is a Sydney family who sold an investment property and needed to park $705,000 before they bought another home in six to 12 months’ time. This family was going to put the money in a bank’s “bonus” savings account paying 5.2% for a few months, which then dropped to a very low 3.5%.
Instead, they will now likely earn an extra $9,000 per annum by investing in a diversified portfolio of bank deposits and bonds.
The point I try to get across to those who are worried about retirement – or who are unhappily retired – is that they have to get their minds out of the approach of 100% or 100% bank accounts.
There are smarter solutions out there for you. Start by becoming informed, and always get advice before you act.
 
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Do your homework and don't be greedy when investing in property: Mark Bouris
 
Most of us have focused on the cash rate cycle in recent times, but there’s another cycle I’m interested in: property.
Australian property prices were inflated leading up to the GFC, and then they started falling. Property prices fell more drastically in some of the major cities than in others. However, investment property was hit hard. Many investment apartments were liquidated, as households switched their outlook from debt to savings.
But it could be time to look again.
There are a few observations behind this: firstly, interest rates are near 50-year lows, so debt is cheap.
Secondly, rental vacancies in capital cities are low, meaning strong demand for rental properties.
Thirdly, although house prices are now moving upwards in some cities, it’s a slow recovery nationally, meaning there is value for smart buyers.
Lastly, employment is still strong in Australia, meaning you can find a lender for an investment property.
Where would you start? Personally, I would rather make a profit on my property and pay the tax than be negatively geared, which entails booking a loss. Going for “yield” means buying well and having good equity in the property, so the costs don’t overcome the revenues.
However, if you want to negatively gear a property you must ensure you have an adviser because the ATO does not accept mistakes in your calculations.
But for the basics of what to look for in an investment property, I really like the check list used by RUN Property:
Location: buy close to shops, train stations and schools; Scarcity: Art Deco and scarce architecture increases demand; Features: properties with views, outdoor living spaces or units with off-street parking; Demand: which can be seen in median valued properties, low rental vacancy rates and infrastructure which can support employment; and don’t forget capital growth and rental yield.
Regionally, it’s the mining areas where rental yields are strongest: the Bowen Basin and Port Hedland provide high gross rental yields.
When it comes to owning rental property, always do your homework, talk to experts and be realistic (not greedy).
And good luck.
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
<a href="https://www.flickr.com/" target="_blank"></a>
These three articles were originally published on Property Observer in 2012.
 
 
 
 
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Property as part of your investment portfolio: Three of the best of Mark Bouris

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During the week I received scores of emails from cash investors who are either retired or are on the verge of it and are alarmed at the direction of official interest rates, which hit 3% last week.
These people are alarmed because with inflation at 2% (and core inflation at 2.8%) and the average cash yield from banks at 3.5% (soon to be lower), their investments aren’t earning much more than the cost of living.
A lot of these people have retreated from shares due to their volatility but now find themselves relying on either money in transaction accounts or term deposits.
In the latest Australian Taxation Office breakdown of the investments in self-managed superannuation funds, the largest asset class is “cash and term deposits”, at 30.7%.
The retreat from shares into government-guaranteed cash has made people feel safe in the short term, but now also vulnerable.
So what to do? Here are some thoughts:
1. Transaction accounts, cash management accounts, term deposits and accelerated savings accounts are all capital guaranteed by the government up to $250,000 per person. They are all zero risk.
2. You can find a better yield than a transaction account’s 0% without taking on more risk. I’m sure that the institution you save with has another product that rewards savers by paying them up to 4%, and it also has term deposits that pay more than that.
3. You can diversify your investments within capital-guaranteed investments; you don’t need all your cash in one account. Why not have a lump of funds constantly being rolled over in 90-day term deposits, and some others in one-year TDs? Then have a large amount of your savings in a high-yield online savings account, and have the interest paid into your transaction account.
4. Don’t forget bonds. Typically they come in the form of government bonds, corporate bonds, bank bonds and bank covered bonds. Many bonds are low-risk debt products that yield good returns, and retail investors can invest in them, usually in a retail fund environment. Some of these funds have been returning as high as 7-8%t p.a. to their investors.
5. Get advice. From what I am seeing, cash investors are staying away from advisers or they’re unhappy with the amount of interest shown in cash investors by advisers. I suggest that instead of dropping out of financial advice altogether, you search for a planner with an interest in cash investment strategies and then adopt a more active approach. Don’t make cash a ‘set-and-forget’ option.
If you look at all of the cash and bond options, your available yields move from 0% to 8% p.a.
As interest rates move down, your job is to find more yield with little risk. I’ll be interested to see how you go. <a target="_blank" href="mailto:mark@ybr.com.au">Send me an email</a>.
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
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Five tips to increasing your savings in a low-interest-rate environment

Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Joel Robinson

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Mortgage relief? NAB forecasts RBA rate cut, not hike, after softer economic conditions

A local downsizer has splashed $6.5 million on a penthouse in Perifa's Alex &amp; Willow development in Crows Nest. 
&nbsp; 
The purchaser sold their long-held family home in the area before embarking on a six-month search for the right apartment. After inspecting a range of options across the Lower North Shore, the buyer returned to <a href="https://www.apartments.com.au/new-apartments/alex-willow-crows-nest-82-90-alexander-street-crows-nest-nsw-2065">Alex &amp; Willow</a>. 
&nbsp; 
The buyer profile reflects the project’s broader purchaser mix. <a>Alex &amp; Willow</a> has attracted predominantly local downsizers looking to transition from larger homes without compromising on space or quality, alongside a smaller cohort of upsizers and investors drawn to the project’s location and design credentials. 
&nbsp; 
The milestone sale comes as the project, developed by&nbsp;<a href="https://www.apartments.com.au/developers/perifa">Perifa</a>&nbsp;and delivered by <a href="https://www.apartments.com.au/builders/versatile-made-construction">Versatile Construction</a>, both part of Versatile Group, reaches 60 per cent sold.

[smartcode_project:default project_id=6680 project_image_fid=371325] 
&nbsp; 
Eddie Mansour, Managing Partner of <a href="https://www.apartments.com.au/project-marketer/ray-white-projects">Ray White Projects</a>, said the result demonstrates not only a headline price but also depth of demand. 
&nbsp; 
“This is an exceptional outcome and a clear reflection of sustained buyer demand for premium, well-located downsizer product,” Mansour said.

“We’re seeing a consistent pattern of local homeowners selling family residences and reinvesting into high-quality apartments that allow them to remain within their community. Alex &amp; Willow has resonated strongly with this group because it offers genuine scale, thoughtful design and immediate proximity to the village.” 
&nbsp; 
The sale reflects a broader and consistent trend of local downsizers actively seeking high-quality, low-maintenance residences close to established village centres. Agents report that demand for this product type has remained resilient, particularly where developments offer a rare combination of scale, design quality and walkable amenity. 
&nbsp;&nbsp; 
Fabrizio Perilli, Managing Director of Perifa and Versatile Group, said the sale marks a defining moment for the project. 
&nbsp; 
“The penthouse sale is a strong endorsement of the quality we have delivered, alongside our partners, and the clear demand from local downsizers for premium, boutique residences in this location,” Perilli said.&nbsp; 
&nbsp; 
“Most importantly, we’re proud to see the Alex &amp; Willow community beginning to take shape. As we move closer to completion, we’re looking forward to welcoming residents and seeing the project come to life.”&nbsp;

[smartcode_project:default project_id=6680 project_image_fid=338516] 
&nbsp; 
Designed by <a href="https://www.apartments.com.au/architects/nettletontribe">Nettleton Tribe</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richards Stanisich</a>, Alex &amp; Willow is a boutique collection of generously sized two- and three-bedroom residences in the heart of Crows Nest village.&nbsp;

Completion is slated for early 2027.

[smartcode_project_cta:default project_id=6680]

Alex & Willow, Crows Nest penthouse sells off the plan for $6.5 million

Fresh from launching the first stage of its Wollongong precinct, <a href="https://www.apartments.com.au/new-apartments/keira-place-wollongong-120-122-smith-street-wollongong-nsw-2500">Keira Place</a>, builder-developer Urban Property Group has unveiled plans for the next phase of the masterplanned community.

Now on public exhibition through the NSW Government's Housing Delivery Authority pathway is a State Significant Development Application for a further 657 homes on the prominent gateway site opposite Beaton Park.

The proposal comprises three buildings, including two build-to-sell towers rising 25 and 30 storeys, delivering 391 apartments, alongside a 12-storey co-living building with 266 residences, making it one of the largest co-living proposals currently planned in regional New South Wales.

Of the apartments proposed in the build-to-sell towers, the majority, 310, are two-bedroom dwellings. The balance comprises 44 one-bedroom apartments and 37 three-bedroom residences. Apartment sizes range from around 50 sqm for one-bedroom homes to approximately 90 sqm for three-bedroom apartments.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="19347059-1612-41a0-9c74-b86a657237f8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%2010.02.18%E2%80%AFAM.png?VersionId=sWXnaCcA.cIC6N8YT1dg5pJ2e1V3Z6z7" />

The submission says the proposal has evolved significantly from its original Housing Delivery Authority application following extensive consultation with the State Design Review Panel and Wollongong City Council.

The final scheme has been designed to align with the emerging vision for the Flinders Street Precinct, an area identified by Council as a future high-density mixed-use neighbourhood capable of accommodating substantial housing growth close to transport, employment and community infrastructure.

According to the design report prepared by COX Architecture, the development aims to "deliver a built outcome consistent with the future character of the Wollongong CBD while responding to the site's unique constraints and opportunities."

"Our vision for the next phase of the site evolution in Wollongong is grounded in three design pillars that guide the design response: place, natural environment and celebration," COX said.

"Inspired by its surroundings and grounded in the stories of place on Wodi Wodi Country, the design proposal acknowledges the established character of its setting while creating a unique and timeless identity that sits harmoniously within it.

"The design proposal responds to its specific site conditions, acknowledging the vegetation, climate, wind conditions and solar access of the site."

The architecture responds directly to the site's position between Wollongong's urban core and its natural landscape setting.

COX identified views towards Mount Keira and the Illawarra Escarpment as defining features of the site, while the upper levels of the towers will also capture expansive views across the city and out to the Pacific Ocean.

The design team has positioned the tallest buildings closer to the rail corridor, where overshadowing impacts can be better managed while establishing a landmark built form on the northern approach into the city.

<img alt="Smith St" data-entity-type="file" data-entity-uuid="79580d5b-500c-4ebf-9629-797146a4a694" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-10%20at%209.51.59%E2%80%AFAM.png?VersionId=WbTB1EKSG.KDfsfz0F3wp1QVa2oCMGR5" />

Urban Property Group secured the 11,000 sqm Smith Street site in 2022 and has since progressed plans for the broader Keira Place precinct.

Construction recently commenced on the first stage of Keira Place, which will deliver 150 apartments across two residential buildings, including 27 affordable housing apartments and 18 specialist disability accommodation dwellings, alongside activated ground-floor retail and commercial space.

Urban Co-CEO Patrick Elias said the commencement of construction marked a significant milestone for Wollongong and reflected the developer's long-term commitment to regional cities.

"Today's groundbreaking is about turning approvals into homes and moving quickly to deliver much-needed housing in Wollongong's city centre," Elias said.

"Keira Place will provide a diverse mix of homes close to jobs, transport and services, while setting a high benchmark for quality, durability and consumer protection."

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/groundbreaking-marks-start-of-construction-at-keira-place-in-wollongong-cbd">Groundbreaking marks start of construction at Keira Place in Wollongong CBD</a>

&nbsp;

&nbsp;

&nbsp;

Mark Bouris

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