Super fund returns are back on track + 8 ways wealthy people stay rich

Happy Friday,

Hope the short week and the long weekend recharged everyone. Libby and I had a chilly weekend in Canberra for football ... but a win always warms you up! It also reminded us of what Canberra has to offer.

We had a terrific meal in front of the open fire at the Civic Pub and, while the older grandkids went to the War Memorial to help their high school modern history studies, we took the 3-year-old to the playground at the National Arboretum and then to the National Dinosaur Museum, which was a lot of fun.

It was a weekend of open fires and red wine as well. I’m enjoying Taylor Jenkins Reid’s new book Atmosphere at the moment. 

It was a pretty quiet short week on the economic front. In this newsletter:

• Small business owners and tradies need to act fast on the Instant Asset Write-off tax break

• 8 ways wealthy people stay rich

• Super fund returns are back on track

• The cost of living bites

• Be careful of the Medicare Levy Surcharge if you’ve had a wage rise

Heads up for small business owners and tradies

I’ll cover a few more tax tips towards the end of the month and into July when everyone is working on their tax returns, but small business owners and tradies need to get their act together now if they want to take advantage of the Federal Government’s $20,000 Instant Asset Write-off.

For eligible businesses with an aggregated turnover under $10 million, this allows for an immediate tax deduction on the full cost of each qualifying asset under $20,000, provided it is first used or installed by 30 June 2025. The threshold applies per asset, enabling multiple purchase write-offs. 

It is a great opportunity to invest in your business as the write-off applies to multiple purchases/assets as long as they are under $20,000 each.

Why is it so important to do something now? The threshold is changing from 1 July 2025 to just $1,000 per asset - that’s a significant change so you have basically two weeks to invest in those assets and maximise the tax benefit.

8 ways wealthy people stay rich (and get richer)

It’s a lot of fun reading the annual Rich Lists in the AFR and The Australian ... and this year is no different. You soon realise there’s a big difference between having a lot of money and being truly wealthy.

Paul Sullivan, author of The Thin Green Line: The Money Secrets of the Super Wealthy, puts it concisely: wealthy people don’t just have money, they know how to protect and grow their wealth as well.

This security requires having a full understanding and appreciation of their finances, not just a knack for lavish spending.

The good news is the rest of us can learn from the money habits of these super-wealthy people, incorporate them into our own lives and hopefully get there ourselves a little faster.

Here are 8 money lessons we can learn from the wealthy.

1. They create wealth

Flick through the AFR Rich List or Young Rich List on any given year and you’ll notice the majority of entrants are in the business of wealth creation.

Maybe they started their own business, had an amazing idea or are at the pinnacle of their field.

The lesson here is that these people have given it a go and as a result, are able to generate their own income and assets to grow their overall wealth.

2. They take smart risks …

Wealthy people understand that there is no reward without risk.

Of course, you could always win the lottery, but you could also get struck by lightning. It’s not something you want to rely on.

So whether it’s borrowing money to grow a business or investing in income-generating assets over the long term, rich people are comfortable with taking on a reasonable level of risk to generate an above-average return.

3. … But they do their homework

While the wealthy are happy to take a risk, they do their homework carefully before making a move.

They put in the time and effort to ensure they have every base covered, and they’re not emotional about it. If the deal doesn’t stack up, they have no problem just walking away.

4. And they’re not afraid of failure

Gerry Harvey once said to me, “You’ve never been in business until you’ve been to the brink, looked over the cliff, learnt the lesson and then stepped back.”

It’s great advice. At the time, I thought he was just being grumpy until it happened to me, and then I realised how insightful he was.

5. They’re frugal

This one always stumps people. Aren’t rich people constantly splurging on designer watches, eating out and first class flights? Nope.

It’s much more likely that they’re watching every dollar that goes in and out like a hawk: it’s how they got so rich in the first place (and why they’re much more likely to stay that way).

According to research that Paul Sullivan completed with financial psychologist Brad Klontz, the richest one per cent eats out 30 per cent less than an average wealthy person, and also saves 30 per cent more for retirement.

Frugal and conservative decisions like these are a way of life for wealthy people and extend into all aspects of their finances.

6. They work hard (really hard) …

Self-made people know from experience that one of the surest ways of rising above the rest is working harder than everyone else.

There’s no way around it. In almost any field, if you’re looking for work-life balance and reasonable hours then chances are you’re not going to be striking it rich.

So if you’re looking to earn lots of money, get ready to make some sacrifices.

7. … And drive a hard bargain

Most wealthy people are born negotiators who want the very best deal in every situation - no matter how big or small - and are prepared to haggle to get it.

They don’t get embarrassed about pushing too hard on a purchase and are relentless in getting the best deal on everything they can.

8. Finally, they keep their feet on the ground

I’m a big believer that the richest people are those with a great family around them, not just a lot of money in the bank. In my experience, the “wannabes” are usually the pains in the backside while those who have made it are terrific people.

After all, you can always earn more money, but family, friends and values you can’t buy.

How good are our farmers?

The media headlines this week have been focussed on the Prime Minister’s plans for a productivity summit to streamline the Australian economy and make it more efficient.

It’s a great idea, as long as the best suggestions are actually put into action. The last thing we want is yet another talkfest.

If the summit needs inspiration it should be quizzing our farmers, who have made enormous productivity gains.

Super fund returns are back on solid ground

The big rebound in global share markets has certainly helped your superannuation fund returns. After a small positive result in April, leading superannuation research house SuperRatings estimates that the median balanced option returned 2.6 per cent to members over May.

The median growth option grew by an estimated 3.1 per cent for the month, while the median capital stable option rose by a more modest 1.1 per cent.

Pension returns also recovered strongly, with the median balanced pension option increasing by an estimated 2.9 per cent. The median capital stable pension option is estimated to rise 1.2 per cent over the month, while the median growth pension option is estimated to rise 3.5 per cent for the same period.

While funds have regained ground over May, the recent volatility in markets is a timely reminder for members to focus on the long term. A member who switched into a Cash option following the March downturn would have missed out on the strong rebound over May.

While the run up to the end of the financial year looks relatively stable, the tariff pause is set to end shortly after so expect continued volatility.

Funds are now on track to deliver mid to high single-digit returns for the financial year, with more growth-focused options potentially reaching double digits if we see current momentum carry through June.

Cost of living bites  

Despite employment reaching a record high in 2024, half of Australian workers are living pay cheque to pay cheque, according to ADP Research’s People at Work 2025 report. The study surveyed nearly 38,000 workers across 34 countries and uncovered stark regional disparities and generational divides in the global workforce’s financial resilience.

The findings reveal a complex financial picture, both locally and internationally: taking on extra work doesn’t necessarily close the pay gap, as nearly six in 10 (57 per cent) workers surveyed globally are still struggling to make ends meet, even working multiple jobs.

In Australia, over half (52 per cent) of workers with two jobs and nearly six in 10 (58 per cent) of those with three or more jobs report holding multiple roles to cover necessary expenses.

Key findings include:

• Global strain: Globally, more than half (54 per cent) of single-job holders, 59 per cent of workers with two jobs, and 61 per cent of workers with three or more jobs are struggling to make ends meet.

• Working multiple jobs to make ends meet: A significant portion of Australians are turning to multiple jobs to cope with financial demands.

  • Two jobs: 58 per cent say they have two jobs to afford extra costs, and 35 per cent to build life savings and prepare for retirement.

  • Three or more jobs: 58 per cent do it to build savings and prepare for retirement, and 46 per cent to cover extra costs.

• Regional comparison: The country with the highest percentage of workers living pay cheque to pay cheque is Egypt (84 per cent), followed by Saudi Arabia (79 per cent) and the Philippines (78 per cent). In contrast, South Korea reports the lowest proportion globally, at just 18 per cent.

Be careful of the Medicare Levy Surcharge after any wage rise

With the thresholds for the Medicare Levy Surcharge about to change, it’s worthwhile making sure you’re not caught, particularly if you’ve had a pay rise this year.

In a nutshell, the Medicare Levy Surcharge (MLS) is an additional tax for high-income earners who don’t hold an appropriate level of private hospital cover. If you earn more than $97,000 as a single or $194,000 as a couple/family this financial year and don’t hold an eligible private hospital insurance policy throughout the entire financial year, you’ll incur a surcharge.

But from 1 July, the thresholds are changing. Singles who earn more than $101,000 or couples/families earning over $202,000 who don’t hold a hospital policy or a combined hospital and extras health insurance policy will incur a surcharge for every day in the 2025-26 financial year they don’t have cover.

The surcharge varies based on your income and climbs the higher your taxable income is.

You may have been one of the lucky Aussies to receive a pay increase above $97,000 this financial year, but unless you hold hospital cover, you’re likely to be stung this tax time. And the kicker is that the MLS is applied for every single day during the financial year that you haven’t held private hospital cover if you’re earning over the minimum threshold. You can’t just wait until 30 June to take out a policy to avoid paying the tax.

The good news is that if you think you’ll get a new job in the 2025-26 financial year or you’re in line for a pay increase that pushes you over $101,000, you have time to lock in hospital cover ahead of 1 July and avoid paying the MLS by maintaining an eligible policy for the full financial year. If I had the choice between getting stung with an extra tax or having hospital cover that could help if I needed it, I know what I’d choose.

There are so many policies available, and it can be confusing to know what’s what, but you need hospital cover or a combined hospital and extras policy to avoid paying the MLS. Extras can still be great for those medical treatments you receive out of hospital, like general dental, optical, physio and psychology, but it doesn’t have an impact on whether you pay the MLS or not.

Another thing to be wary of is basic hospital policies. While they help you avoid paying the MLS, many basic options have minimal cover or virtually none at all. If you’re looking for a policy that you’d be able to utilise, consider a Bronze policy at a minimum. A standard Bronze policy covers 18 unrestricted clinical categories relating to things like ear, nose and throat treatment, joint reconstructions and gynaecology.

For something more comprehensive, you’d want to consider a Silver, Silver Plus or Gold policy. Gold is the most comprehensive option available, covering all 38 unrestricted clinical categories.

The health insurance experts at Compare the Market reckon these are the top tips for locking in health insurance:

Sweeten the deal

There are some rewards, perks and incentives on offer, such as frequent flyer points, weeks free, and waived waiting periods on eligible extras services. See if you can get a great value policy and a little extra on the side to stretch your dollar further.

Compare apples with apples

There are so many options available and while some policies have similar names, the services they offer aren’t always the same. Be sure to check your policy brochure for inclusions, exclusions, waiting periods and more that will apply.

Don’t be stung with a loyalty tax

If you’ve been with the same health insurance provider for some time, you may not be getting the best value. Always compare other brands on the market to see if you can pay less for the cover you need.