With AI Disruption comes Opportunity
This quarter, we update you on significant legislative changes to super and tax, how artificial intelligence (AI) is already impacting investment decisions and disrupting the jobs market, and a fresh leadership focus at Financial Decisions.
New leaders stepping up
As our business evolves, we are pleased to announce that Blake Conde has stepped into the role of Managing Director to support existing CEO Damien Cooper in running the day-to-day business operations. Tim Brosnan has been promoted to Head of Wealth to lead and mentor our growing team of financial advisers.
Blake Conde, Managing Director
Tim Brosnan, Head of Wealth
Together, these changes are designed to increase collaboration and knowledge sharing across all our teams, delivering even better client outcomes, investment performance and service quality.
You’ll hear more from Blake and Tim in the coming months as they fine-tune their plans for the new financial year. As always, our team is available to provide any advice you need.
The hype is real: AI already impacts your wealth and career
Just 15 months ago, the launch of ChatGPT thrust artificial intelligence (AI) into the mainstream. While it has long been viewed as an emerging technology with huge potential, it is now materially impacting stock markets, super fund performance, investment decisions, and employment – positively and negatively.
The rapid development of AI is transforming the job market, with specific industries facing significant automation. Manufacturing, transportation, communications, retail and customer service are some of the sectors at the forefront of these changes, as AI efficiently handles repetitive tasks like assembly line work, delivery optimisation, content creation and answering customer inquiries.
It is estimated that Adobe’s share price took a hit of around 7% following February’s announcement of OpenAI’s text-to-video model Sora, which claims to be able to create production-quality video from written prompts. AI is impacting small businesses, too. For example, we’re helping one of our clients in the design industry transition from a team of 30 down to 6 as AI automates her service delivery.
On the upside, many traditional and emerging companies at the forefront of AI development could positively impact their share prices. Australian tech companies like Nuix and Xero are actively building AI solutions, while established players in finance, banking and healthcare are integrating AI for improved services to drive new efficiencies and product innovations.
Our Chief Investment Officer, Daniel Rolley, is diving deep into the opportunities and risks of AI for our clients’ portfolios, businesses and careers. These opportunities span various industries that directly service the surge in AI demand or leverage AI tools in their products. A few examples of companies serving AI demand include cloud computing providers Amazon, Google and Microsoft, graphics card leader Nvidia and semiconductor capital equipment maker ASML. On the user side, companies like Salesforce and Autodesk are leveraging AI modules to provide greater efficiency for their clients within their software platforms.
As we mentioned in our December update, Government incentives and rebates are available for businesses to adopt digital software, including AI-driven tools.
Whether you’re building a career, leading a business or retiring, our advice is to make the effort to stay current on these advancements and be open-minded about how they may impact your investments and professional decisions. It’s also important to consider how the future of employment might look for children or grandchildren when having career discussions with them.
The best way to truly understand AI’s power is to get your hands dirty. While thousands of AI tools are out there, Gemini, Google’s latest AI assistant, is an excellent place to start. Try it yourself by prompting it to answer questions, create images or write content. It’s like a search engine on steroids!
If you have any questions, don’t hesitate to contact us.
New opportunities to supercharge super
They may look small at first glance, but two critical changes to super coming from 1 July 2024 could be well worth taking advantage of if you have available cash reserves.
Superannuation is a highly tax-effective investment strategy. Every dollar you add to your nest egg brings you closer to financial freedom and a comfortable retirement sooner.
Super Guarantee (SG) to rise to 11.5%
The Super Guarantee (SG) is the minimum percentage of earnings an employer must pay into an eligible employee’s super fund. On 1 July 2024, the SG rate payable by employers will move from 11% to 11.5% of an eligible employee’s ordinary time earnings.
So, if you’re a worker receiving superannuation, you’ll accrue more money in your super account, which can really boost your retirement savings over time.
If you receive super payments on top of your base salary, your take-home pay will stay the same, but your total remuneration will increase. If you are on a package super, depending on your contract, your employer may absorb the cost of the SG increase or pass it on to you by reducing your salary.
Your employer should be aware of the increase, but it is worth checking that you are getting the additional payments into your fund. If your employer pays super each quarter, you may not see the changes until September 2024.
If you have questions or aren’t sure you’re receiving or paying out the correct amount, give us a call and we can clarify this for you.
Super contributions cap to rise from $27,500 to $30,000
The super contributions cap is the yearly limit on how much pre-tax money Australians can contribute to their superannuation to receive tax benefits.
From July 2024, the concessional contribution cap will increase from $27,500 to $30,000, and the non-concessional contribution cap (expressed as four times the standard concessional contribution cap) will increase from $110,000 to $120,000.
Put simply, this means you can now tip more into your retirement savings and take advantage of the generous tax concessions to make your money work harder for you.
One way of making extra super contributions is to ask your employer to pay part of your pre-tax pay into your super account, which is called salary sacrifice or salary packaging. These concessional contributions are taxed at 15%, which for most people will be lower than their marginal tax rate.
Another option is to make after-tax super contributions payments called non-concessional contributions, which may qualify you for a tax deduction.
Depending on your circumstances, several factors must be considered before claiming deductions and making contributions before or after tax. We’d be happy to discuss your strategy and options for growing your super with extra contributions.
Need help getting organised for tax time?
As the end of the financial year approaches, now is the time to organise your tax deductions, work-related expense receipts, super contributions, insurance and income protection, and interest paid on investment properties.
When macro forces like artificial intelligence, sustainability, cross-generational wealth transfer, changing regulations, and geopolitical uncertainty are buffeting markets, there is always plenty to consider.
Your Financial Decisions adviser is happy to help you or your loved ones if you would like to explore opportunities to optimise your portfolio, minimise your tax and maximise your capital growth potential. Please call us on (02) 9997 4647.
Disclaimer: This publication has been compiled by Financial Decisions (AFSL/ACL Number 341678). Past performance is not a reliable indicator of future performance. While every effort has been taken to ensure that the assumptions on which the outlooks given in this publication are based on reasonable data, the outlooks may be based on incorrect assumptions or may not take into account known or unknown risk and uncertainties. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information and any advice in this publication do not take into account your personal objectives, financial situation or needs. Therefore you should consider its appropriateness having regard to these factors before acting on it. While the information contained in this publication is based on information obtained from sources believed to be reliable, it has not been independently verified. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up-to-date or fit for any purpose; and (b) Financial Decisions nor its employees are in any way liable to you (including for negligence) in respect of any reliance upon such information or advice. March 2024
Contact: Financial Decisions PO Box 484 Mona Vale NSW 1660, T 02 9997 4647