The May 2007 Federal Budget was a reminder that governments, businesses, families and individuals alike can use four basic principles to determine the allocation of limited resources to constantly changing alternatives. The four basic principles are:

1. Spend less than you earn
2. Avoid the use of debt
3. Build liquidity – cash in the bank or assets that can be     quickly converted to cash.
4. Set long term goals

As the end of the financial year is upon us it is a good opportunity to ensure we have taken advantage of all the opportunities available to us and to plan for the year ahead. We have included a few of the strategies you may wish to consider in this newsletter and also introduce our new Executive Financial Advice Service.

I hope this eNewsletter finds you well. Please call or email if you have any questions.

Warm regards
Gavin Martin

The opportunity to contribute up to $1 million dollars of undeducted contributions closes on the 30th June 2007. As this window closes another window is still open until 20th September 2007. This is the opportunity to commence a ‘complying' income stream and receive a 50% asset test exemption for Centrelink purposes.

You may consider that the value of your assets is too high to receive any government pension however changes to pension assets test taper rates may change this. The pension assets test taper rate will be halved from 20th September 2007 so that pension recipients only lose $1.50 per fortnight (rather than $3) for every $1,000 of assets above the relevant threshold.

Taking advantage of these two changes may result in increased retirement income and/or your retirement assets lasting longer. Remember the window closes 20th September 2007.

We have officially launched the Executive Financial Advice Service. The service is a strategic financial advice process conducted by Cornerstone Wealth to assist busy executives in getting their own personal “financial house” in order. This, in turn, enables them to continue to focus their energy on the success of the business. The process involves the provision of strategic advice only and does not include product recommendations.

The once off fee for the service is paid by the employer based on the number of executives/employees who have commenced the process. The rate per executive and the number of executives to complete the process are defined in an EFAS agreement.

Please contact Gavin Martin on 03 9642 2268 or gavinmartin@cornerstonewealth.com.au if you are interested in learning more about the Executive Financial Advice Service.

The Australian share market returns are shaping up to be another double digit return for the 2006/07 financial year. This is on the back of three prior years of double digit growth and 14 consecutive years of economic expansion in Australia.

So what does the future hold? Can this continue indefinitely as we ride the resources boom into the baby boomers retirement sunset or will history repeat itself and will we experience a slowing in the economy and falling asset prices?

Many people are concerned about China and the impact any slowing in growth that may occur there. Others are more concerned about the sub prime lending in the United States and the impact falling house prices will have on consumer demand.

These sorts of issues cause us to get a little nervous so I like to remind myself and clients about an old Chinese proverb: It is difficult to make predictions, especially about the future.

Since we cannot predict the future we should focus our energy on the areas in which we can make a difference. This involves:

1. Having a strategy in place and sticking to it – don't be swayed by our emotions of fear and greed.

2. Diversifying – invest in a range of asset classes with dissimilar price movement. Often investors diversify by using different investment managers with different styles who then invest in a very similar group of stocks. This is not diversification.

3. Structure – use the most effective structure to invest (individual names, joint names, trust, company, superannuation)

4. Costs – keep your costs as low as possible as costs are a drain on performance.

5. Manage Risks – take on risk (and therefore expected return) in line with your tolerance to risk, your stage in life and your financial goals.

We cannot predict the future however over the long term capital markets work. In these uncertain times there is nothing like the peace of mind achieved by taking the above five steps.

If you earn less than $58,000 p.a. you may benefit by making a personal contribution to superannuation prior to the 30th June 2007.

The federal government will put in $1.50 for every dollar ($1) you put into your superannuation account, up to a maximum co-contribution of $1,500 a year. The amount of co-contribution starts to reduce once your income exceeds $28,000 and phases out at $58,000 so check the optimum level to contribute and other eligibility criteria on the related Fact Sheet .

Taxpayers can claim an 18% tax offset on superannuation contributions of up to $3,000 made on behalf of their low income or non-working spouse. The maximum rebate allowed is $540 and is calculated as follows.

Rebate = 18% x lesser of (a) and (b) where:

(a)    = $3,000 reduced by $1 for every $1 of the amount (if any) by which the sum of the spouse's assessable income and reportable fringe benefits exceeds $10,800

(b)   the total of the eligible spouse contributions made in relation to the spouse by the taxpayer

Personal deductible contributions are particularly useful to offset capital gains tax triggered by the sale of a significant asset. For example, if you sold an investment property held jointly worth $800,000 that cost $400,000 triggering a capital gain of $400,000 or a discounted capital gain of $200,000 ($100,000 each) then, assuming you are eligible, you could make a $100,000 personal deductible contribution each to wipe out the capital gain. Assuming a 30% marginal tax rate this strategy would save at least $43,000 in tax.

Are you interested in a cheap Australian or international holiday? A good friend of mine, David Utting, recently launched a new service that might interest you. Christian Home Swap enables individuals, couples and families to see the world through local eyes by staying in the homes of locals!

The concept allows Christians to connect with others all around the world, establish friendships, swap homes, and then enjoy free holiday accommodation. Over the next few months there will be hundreds of homes around the world to choose from.

If you prefer to branch out from the Christian scene and broaden the number of house swap opportunities, there is also a secular site launching shortly called YourHomeForMine.com. Stay tuned for further information.

Both sites have a special pre-launch introductory offer of a two year free listing. This offer will close in the next month when the sites are officially launched. To sign up for your complimentary listing or to simply find out more visit www.ChristianHomeSwap.com/invite/ from the 25th June 2007.

This newsletter does not take into account the personal objectives, financial situation or needs of any person. You should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and obtain professional financial advice prior to making any decision.