Big tax rebate for educators, nurses, scientists and mathematicians

Have you recently completed a degree in teaching, early childhood education, nursing, mathematics, statistics, science or midwifery AND since become employed in a job that matches your degree qualifications? If so, then you are probably eligible to have your HECS-HELP tax that gets taken out of your pay, returned to you for up to 260 weeks (5 years).

Whilst it is great to get rid of your HECS-HELP student loan, unlike those in the US, the cost of the loan in Australia is relatively cheap (that said, the actual loan itself is often very big!) – it increases by the CPI every year, which was 1.7% in 2015, making it the cheapest loan you will ever get. This means that if you can make more than 1.7% returns from investing your money rather than paying your HEC debt, it makes sense to get the refund and invest rather than paying down your HECS.

How would you go about making more than 1.7% on your money? It’s not particularly hard, just open an online savings account (think: ING, uBank), and you are likely to make over 3% (or a real return of nearly 1.5%). If you invest in an index fund that tracks the market, on a long-term average you are likely to make 5-7% (with a real return of 3-5%).

For more info check out the official ATO website, which includes the application process, or StudyAssist which provides additional details.

This scheme could help you put $10,000+ dollars back into your pocket in the early part of your career and financial journey, right when you need it most.

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How I save and invest

I love to research. I read the PDS (product disclosure statements) of all the potential financial services I choose. I like to know what I’m in for. So based on the many hours of research I’ve undertaken, here are the accounts I use to manage my money and future…

  1. Everyday account – ING Direct: I use a combination of a regular Orange Everyday account. By depositing my salary in there, I get 2% cashback on payWave/TapnGo purchases under $100 (which is about $300 per year – a pretty good return for tapping!), and free cash withdrawals at any ATM in Australia (they refund the cost of withdrawing back to your account instantly), which comes in handy very often –> in total these benefits save/make me about $500/year. 
  2. Savings account (emergency cash) – ING Savings Maximiser: This account in linked to my Orange Everyday, and by depositing my salary (or more than $1000/month from an external account), you get 3.50% interest, which is the top rate you can get in Australia at the moment aside from term deposits greater than 12 months. The added benefit is it is instantly accessible, and the ING app is extremely easy to use.
  3. Investments – Shares: I don’t invest in individual shares. I don’t have the time or nerves to deal with that. Instead, I use both a passive and actively managed funds to (hopefully!) make my money work for me. For my  passive (‘index’) fund, which includes investments in a broad array of large company shares that effectively mirrors the movement of large sharemarkets, I use the Vanguard International Shares Index Fund (Hedged). This is ‘hedged’, meaning that it roughly avoids the impact of exchange rate fluctuations, and only increases/decreases due to share movements. I also have money in an actively managed fund, which might make other personal finance blogs squirm in their virtu-worlds, but it is to help align my investments with my ethical views. The second investment fund that I use is Australian Ethical’s Australian Shares Managed Fund, which avoids investments in environmentally and socially degrading companies and has performed extremely well over the past couple of years, even when fees are considered (relatively high compared to index/passive funds). I have an automatic transfer that sends a set amount into these funds each week. This helps to smooth out the ups and downs of the markets and ensures instead of trying to play the market, I focus on building my wealth.
  4. Investments – Acorns: I have recently started using this app and I can say it is excellent. It allows you to either invest a small ($5 and above) amount on a regular basis (daily to monthly) or to ‘Round-Up’ your expenses to the nearest dollar and invest the difference – this requires you to link it to your expenses account. The fees are relatively expensive, $1.25/month up to $5000, then 0.275% when above $5000. Despite this, it has gaming elements and shows real-time performance of your investments. It allows you to pick a specific investment profile with a varying mix of shares and bonds, which will depend on your appetite for risk and investment timeframe. I like it for the ability to invest small amounts daily and to watch your money working.
  5. Superannuation – First State Super: If you haven’t rolled your super into one account yet – stop reading now and do it! (Check out the ATO SuperSeeker to do it online – you will need to signup for myGov). I would then suggest going with your industry’s super fund, as high fees of many funds significantly reduce your final superannuation balance. I go with First State as it is the teacher’s super fund, and I have a split 50% Diversified and 50% Ethical Diversified balance  – with the ethical fund performing better over the past few years!
  6. Credit cards – 28Degrees: This is the card to use for international purchases. I only really use it for automatic bills, when I purchase online and on overseas holidays. When travelling overseas, load it with cash so it has a positive balance to avoid interest charges.

Check these out for yourself, they have really helped me to consolidate and grow my wealth. Any suggestions for things you use to help manage your finances and accounts let me know!