Eureka Correspondence

The assets test, balanced portfolios and Forge shares.

Asset testing the age pension

I read with interest Scott Francis’s article on the Commission of Audit proposal relating to means testing of the family home. I noted that in examples used by Scott, he focused on the income test effect. I would have thought that the assets test would have a greater impact and in many cases would see people lose access to the age pension entirely, as they exceed the asset test threshold due to the additional assessment of the family home. Further, I would expect that any change in this area would only relate to assets – not income, as the person receives no income from the family home. Just as motor vehicles are asset tested, but not income tested!

Scott Francis’s response: Thanks for your letter.  Your point is a good one – however, in a separate recommendation, the National Commission of Audit Report said the asset and income tests should be abolished, and a ‘comprehensive income test’ should replace them.  If we were to assume that this recommendation is followed (and all of this is, of course, speculative – just because it is a recommendation does not mean that it will happen), the report then suggests ‘extending deeming’ as the way that a principal place of residence is dealt with under the proposed ‘comprehensive income test’.

Balancing your portfolio

I am retired and have stocks that I believe give me good dividends. I do not want buy and sell shares. I believe have the balanced portfolio with almost 1/3 in real estate, shares and bank deposits. What would you say is a balanced portfolio?
Eve de Klerk

Editor’s response: Thanks for your question. Our contributors have done a number of articles on how you may wish to balance your portfolio, though it depends on your personal preferences and circumstances. Dr Doug Turek, one of our key experts in the area, has written about various property allocation options as well as how to rebalance your equities/bonds mix. More recently, he has provided his opinion on a new way to allocate assets where you put funds into different investment buckets.

Stuck with Forge shares

Dear Alan and the Eureka Report team, I am stuck with Forge (FGE) shares and would like some advice as to how I can get them out of my CommSec portfolio – every time I look at them there I get depressed and ask myself “what was I thinking?”. I have received a letter from the liquidators telling me that I can claim a tax loss this year, and that is at least some way positive, but I really want to get a full disposal from my listed portfolio. Can you help me please?

Brendon Lau’s response: Forge is a story we would all like to forget, though there were lessons learned from the company’s flop as I wrote back in November. I am not familiar with the CommSec system, but I think you can remove/edit your holdings through the portfolio settings function. All online trading platforms should have this feature and the CommSec team will be able to help you out if you can’t find the “settings” button.

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