{"id":705770,"date":"2026-05-31T06:24:28","date_gmt":"2026-05-31T06:24:28","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/705770\/"},"modified":"2026-05-31T06:24:28","modified_gmt":"2026-05-31T06:24:28","slug":"young-invested-three-portfolio-decisions-to-consider-after-federal-budget-changes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/705770\/","title":{"rendered":"Young & Invested: Three portfolio decisions to consider after federal budget changes"},"content":{"rendered":"

Welcome to my column,\u202fYoung & Invested<\/a>, where I discuss personal finance and investing for Gen Z and Millennials. <\/p>\n

This column aims to be a resource for young investors navigating an ever changing financial, political and social landscape as they try to build wealth. Tune in every Thursday for the latest edition. <\/p>\n

Edition 65 <\/p>\n

The federal Budget has generated plenty of noise over the past few weeks. According to google trends there\u2019s been a significant uptick in searches for \u2018New Zealand tax rules\u2019. Before you pack up and move to greener pastures, it\u2019s worth remembering that a shift in tax policy shouldn\u2019t be the thing that sends your entire strategy into a spiral. <\/p>\n

People are justifiably uncomfortable with the shifting landscape of rules, but a hyper\u2011fixation on minimising every possible tax bill is a strangely exhausting hobby that ignores the point of investing in the first place. That is, the after\u2011tax return that funds the life you\u2019re actually trying to live, not the imaginary one where you spend a weekend generating AI images of the Prime Minister. <\/p>\n

Policy settings will continue to evolve and sometimes in ways that feel like they were drafted at 11:59pm the night before. As individual investors, we can\u2019t control housing supply, inflation, tax reform or the political theatre that now seems to accompany every Budget announcement. <\/p>\n

What we can control is how we respond. Investing is difficult even in the best conditions and it\u2019s hard not to feel discouraged when new barriers appear between you and your goals. But the fundamentals haven\u2019t changed. Your long-term outcomes can still be driven by the levers within your control. None of these have been taken out of your hands. <\/p>\n

Where you put your next dollar <\/p>\n

The question on a lot of minds right now is where to put the next dollar. But unless you\u2019re a property investor, you shouldn\u2019t need to rethink your entire investment strategy. <\/p>\n

One of the biggest forks in the road is between superannuation and investing outside of the system. As I mentioned in my previous article<\/a>, many young investors have turned to the share market to accelerate the timeline on a first home deposit. It has proved a reasonable way to grow the funds required, whilst maintaining a level of autonomy if financial goals change. <\/p>\n

What has now shifted is the relative attractiveness of certain assets and the optimal tax environment for each investment. Amid plans to replace the 50% CGT discount with indexation and introduce a minimum 30% tax on gains, super has remained largely untouched. This makes the system one of the most tax-efficient places to grow long-term wealth. <\/p>\n

Thus, it shifts the attractiveness in favour of using the First Home Super Saver (FHSS) scheme to grow a deposit. The scheme allows eligible buyers to make contributions of up to $15,000 in any one financial year with a maximum of $50,000 across multiple years. These contributions face lower tax rate compared to investing outside of super, where every dollar you contribute will be taxed at your marginal rate. <\/p>\n

In other words, you get the tax efficiency of super without locking the money away until retirement. However, you are required to sign a contract on a home within 12 months of releasing the funds. <\/p>\n

The primary consideration here is flexibility. When you invest outside of super, you\u2019re at liberty to withdraw whenever you want, change your mind, timeline, investment strategy or entire life plan. Contributions to the FHSS scheme legally fence you into conditions that allow little autonomy. <\/p>\n

None of this implies investing outside of super is a \u2018bad\u2019 thing to do now. Investing is a fundamental trade-off and it\u2019s up to each investor to determine whether they\u2019re comfortable with forgoing a level of flexibility on their goals to gain better after-tax outcomes. <\/p>\n

Your behaviour <\/p>\n

The removal of the 50% capital gains tax discount has undoubtedly created a sense of loss, even though the new system isn\u2019t explicitly a case of \u2018CGT is now higher in every scenario\u2019. <\/p>\n

Under the old rules, once you held an asset for twelve months and one day, you received a 50% discount. After that period, there was no additional tax benefit to holding for 5, 10 or 30 years. The incentive was largely to make it past the one year mark. <\/p>\n

The new system flips that notion as a 30% minimum CGT rate applies and indexation of your cost base now accumulates over time. The longer you hold, the more inflation increases your cost base, and the lower your real taxable gain becomes. <\/p>\n

Conversely, investing outside of super now means that the gross return required to hit the same after\u2011tax target is simply higher. One of the ways you may adjust to a higher return hurdle is by changing your asset allocation and move into assets with higher expected returns. <\/p>\n

At some point, the maths forces a choice between taking on more risk for a higher expected return, adjusting your goal by contributing more or accepting a slower path there. <\/p>\n

The irony in all of this is more behavioural. The tax changes technically reward long\u2011term thinking, but the higher pre-tax return now required could push people toward taking more risk than their tolerance allows. <\/p>\n

It\u2019s important to be wary of trying to \u2018make up the difference\u2019 by chasing higher-volatility assets, overtrading or jumping between strategies. Investors consistently earn less than the investments they hold due to mistimed decisions, particularly in more volatile investments. <\/p>\n

\"mind<\/p>\n

The system appears to be rewarding patience with the removal of the flat 50% discount after 12 months, however the psychology of feeling like we\u2019ve lost something may nudge toward poor investor behaviour and lower overall returns as a consequence. <\/p>\n

Looking at the fees <\/p>\n

One thing that has become incredibly important in the post-budget mania are the fees we pay to invest. These are one of the few drags on total returns that are well within our control. <\/p>\n

While everyone else is arguing about CGT floors, indexation and whether income is now better than growth, I found myself revisiting my own portfolio to check whether the fees I\u2019m paying still make sense. <\/p>\n

The irony of budget cycles is that investors are often bombarded with commentary about changing strategies, switching asset classes, or chasing tax\u2011advantaged environments. It\u2019s easy to forget the far more predictable. Even a 1% difference in long-term fees can outweigh the impact of most tax tweaks we\u2019re debating. <\/p>\n

\"the<\/p>\n

The long-term impact of fees at varying levels. $100k in two funds, both returning 7% p.a. (before fees) over a 10-year period. Source: Author calculations. <\/p>\n

However, the question isn\u2019t whether an ETF is simply cheap or expensive in absolute terms. The lowest\u2011cost ETF on the ASX charges 0.03% a year, but that doesn\u2019t mean we should reject every other fund in favour of that. Fees only make sense when viewed in the context of what you\u2019re getting e.g. the market you\u2019re exposed to. <\/p>\n

Plenty of funds charge more without delivering meaningfully better outcomes for investors. As shown above, seemingly insignificant gaps can become a permanent headwind to compounding. <\/p>\n

The Morningstar Medalist Price Score is an efficient way to show whether a fund\u2019s fee structure is working in your favour or eroding your long-term returns. Instead of looking at fees in isolation, the score evaluates whether a fund\u2019s pricing is competitive relative to its category peers. You can find a detailed rundown on the Medalist Price Score here<\/a>. <\/p>\n

In a world where markets always seem uncertain and legacy tax settings are shifting, keeping fees low remains one of the few guaranteed ways to improve your after\u2011tax, inflation\u2011adjusted outcomes. <\/p>\n

Get Morningstar insights in your inbox<\/a>Read previous Young & Invested columns<\/a>\"\"\/<\/p>\n","protected":false},"excerpt":{"rendered":"Welcome to my column,\u202fYoung & Invested, where I discuss personal finance and investing for Gen Z and Millennials.…\n","protected":false},"author":2,"featured_media":705771,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[16159,2001,64,63,99,44704,44705,88374,343455,186,164573,7688,20966,5476,8425,1788,184,185,17030,5792,4961],"class_list":["post-705770","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-apple-news","tag-asx","tag-au","tag-australia","tag-business","tag-cgt","tag-cgt-discount","tag-federal-budget","tag-fhss","tag-finance","tag-first-home","tag-housing","tag-indexation","tag-investing","tag-investments","tag-labor","tag-personal-finance","tag-personalfinance","tag-portfolio","tag-superannuation","tag-tax"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/705770","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=705770"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/705770\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/705771"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=705770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=705770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=705770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}