Most Australians think the Budget Just Changed the Rules on Property. They Have No Idea How Far it Actually Goes.
- Written by: The Times
A generation of Australians may be entering the biggest rethink of wealth creation since the rise of the property boom, with the Federal Budget shaking confidence in the investment strategies many households spent decades relying on.
The CEO of Phillip Capital Stockbroking, Mr Craig Semmens says the budget has reset the after-tax return calculation on virtually every investment most Australians own and those affected are still trying to understand the implications of what changed on budget night.
“These investors aren’t lost, they just need a new map,” he says.
“For the first time in decades, people are questioning where they should put their money.”
“What we’ll see is a much wider reassessment of how people think about wealth, asset classes and financial security.”
Australians are entering a period of investment uncertainty as traditional pathways to building wealth are now unclear with many investors questioning what they should do next.
According to Semmens, the Budget has reset the after-tax return calculation across the Australian investment landscape, forcing investors to reassess not only property, but shares, ETFs and long-term retirement strategies previously considered relatively stable.
“Australians built entire financial identities around a property-led wealth model.”
“Many people, particularly younger investors will be questioning whether that model still works.”
He says the uncertainty extends beyond property investors, warning many people still don’t fully understand how the capital gains tax changes will affect them.
“There’s huge uncertainty around which long-term wealth strategies investors should trust going forward.”
Unlike the proposed negative gearing changes, which are largely concentrated around residential property, he says the CGT reforms have implications across almost every major growth asset outside superannuation.
“For investors who built retirement strategies around selling assets in lower income years to minimise tax, the rules have changed mid-game.”
Rather than simply creating a tax discussion, he says the changes have triggered a more serious reassessment of how investors think about financial security, diversification and long-term wealth creation.
“We’ll see a rethink around wealth, asset classes and financial security.”
“Many younger people may become more open to shares and not because they suddenly prefer the share market, but because the property pathway they knew is out of reach.”
“Shares can feel more accessible because people can start investing with relatively small amounts of money rather than needing hundreds of thousands of dollars upfront.”
But he warns investors moving from property into equities without proper knowledge, risk replacing one problem with another.
“One of the most common mistakes property investors make when entering the share market is mistaking concentration for diversification.”
“Moving from one investment property into one high-conviction share position is not diversification.”
He says investors are also entering a very different psychological investment environment than the one that shaped the property-heavy wealth strategies of previous generations.
“Property behaves very differently emotionally to shares.”
“People need to understand that market volatility can test decision-making, patience and confidence in ways many first-time share investors haven’t experienced before.”
Despite the uncertainty, he says the core principles of long-term investing remain largely unchanged.
“Patience, discipline, diversification and focusing on quality income-producing assets still matter.”
About: Phillip Capital is a global financial services firm with 50 years’ experience, operating in 15 countries. In Australia, it offers full-service stockbroking, wealth management, research, and global market access and operates under the POEMS name, previously Amscot Stockbroking.
