gyms, pools
and a 24-hour
concierge may
have lifestyle
appeal, they
also have hefty
strata levies. “And
these units don’t
have a sinking fund yet
so the initial purchasers
ofthepropertieshavegotto
investalotofmoney–$10,000to
$12,000ayear–tobuildupthesinkingfund.”
Disheartened millennials often consider buying
and selling an investment property to fund their own
homebutRafterysaystherearerisksattachedtothe
strategy.“Therearesomeprettyhighentryandexit
transaction costs. People think, ‘I’ll buy the investment
propertyfor$500,000andsellitfor$650,000,’butdon’t
take into account the conveyancing costs, stamp duty,
agent’s commissions and capital gains tax. All of those
addup.Foraraw$150,000profit,theymayonlyseea
portion of that. It’s even further diminished because
they would’ve had the property negatively geared in
all likelihood for perhaps the five years they’ve held it.
“Sotheymaybemakingalossof$10,000forfive
years. Yes, they get a tax benefit off it but the net after-
tax loss has to form part of their calculation when they
makeanassessmenttoseeifthey’vegotagoodreturn
on investment or not.
“There’snoguaranteewithinvestments.Ifyouare
guaranteed a 15%pa return you’d do it. You’ve borrowed
at5%andget15%.You’ddoit100timesoverbutit’s
partly glorified gambling when the market is as high
as it is right now.”
SUPERANNUATION
MartinFahy,headoftheAssociationofSuperannuation
FundsofAustralia,saystheaverage25-year-oldentering
theworkforcenowcanexpecttohave30to40different
roles and up to 20 employers before they retire.
Clearly,millennialswillneedtohavetheirwitsabout
them.“Superisyourmoney–youshouldbeactively
engaged in monitoring and managing it, whether it’s
finding and consolidating accounts, salary sacrificing,
lookingatinvestmentstrategiesandfees,orsimply
workingouthowmuchmoneyyouneedtoensure
youhaveenough,”hesays.
The good news is super’s generous tax concessions
make investing for retirement very attractive. “Ask
a60-year-oldwhatwouldtheydodifferentlyabout
money and most of them will say, ‘I wish I had
putmoremoneyintosuper,knowingthatmoney
makesmoney’,”saysRaftery.
“Ifyouput$25,000ayearintosuperoverthenext
40yearsasacouple,that’s$1million.Youarepotentially
savingupto32%taxonthatamount,whichis$325,000.
And that’s without taking any earnings into account.
So try not to have only the basic minimum going in
because money makes money. You’ve got another 30
to40yearsofworkandit’saforcedformofsavingas
much as anything else.”
Time is your friend, says Bergel-Grant. “You
shouldbeinagrowthorhigh-growthstyleof
portfolio because there’s no point holding cash for
thenext40years.That’snotgoingtomakeany
significant amounts of money. You’ll be invested
in good markets and bad but realistically if you
believe the sharemarket will be worth more when
youretirethanwhereitistodaythere’snoreasonnot
to be mostly fully invested in the market.”
For super tips go to superguru.com.au/about-super.MW
hile many millennials are struggling to find
their place in the world, Tayla Nicoll has
forged ahead, going from strength to strength.
The 23-year old from the NSW central coast was
the only one in her group of friends who didn’t go
to uni after school but she has no regrets. She
hasagoodjobwithaliquorchainandapassion
for property.
“I started off working casually when I first
startedout,thenwithin12monthsImovedonto
beatraineemanagerandnowIamthemanager
of a large store, the biggest in our area, and I also work as
a relief area manager,” says Tayla.
Her mum opened a savings account for her when she
was little, contributing regularly. She encouraged Tayla to
do the same. The money was used to purchase her first
property at 18.
“IwasluckytogetapropertyinUminaatagoodprice.
WhenIcametosellingitthreeyearsagoImadequite
alargeprofit.”Shesayspropertypricesonthecentral
coast have “gone crazy”, pushed up by Sydney buyers.
With her partner Aaron Benson, a builder who shares
her passion for renovating, they bought another two
houses.“Weliveinoneofthem–itwasalmostunlivable- until we turned it into a beautiful home. The other was
rented out as an investment property. We worked on it
before we sold it 12 months ago. We’re really happy with
theprofitwemade.”
Buoyedbytheirsuccess,theyarelookingtobuyand
renovate another house. Tayla is grateful for all that she
learnt from her family. “My grandfather worked his way
up from nothing and has a successful business now. My
mother worked in the banking industry and passed on
alotofknowledge.”
Unlikemanyofherpeersshedoesn’tfindhavinga
mortgage daunting. “I’ve juggled a mortgage – at times
two–withhavingafull-timejobbutI’vestillhadtimefor
friends, family and travel. The property market may not
be what it was when our parents started out but it's still
possible to get your foot in the door.”
CASE STUDY
The money
put away in
the savings
account
helped buy
the first
property
at 18