If you spent last week doomscrolling Budget takes, feeling like on top of not getting enough protein, you’re not getting ahead quick enough financially — you’re not alone. This is me.
It feels like we’ve taken the five stages of grief (denial, anger, bargaining, depression, and acceptance) and created a few extra (memes, AI abuse, blame). And that’s because all the no-post-just-comment accounts started getting political in the comment section (on both sides).
Last Tuesday, Treasurer Jim Chalmers announced what he called the “most important and ambitious” Budget in years. A significant part of his Budget was a reshaping of the capital gains tax (CGT) discount, largely removing the 50 per cent discount from mid next year onwards and replacing it with an minimum 30 per cent tax rate. Oh, and discretionary trusts are getting a minimum tax rate (this is something most people will never have to worry about). Some winners and losers in the Budget, as we read about every year.
Let’s be honest though. Well before this Budget, a lot of us started quietly wondering if this is proof the whole game is rigged against us. This is not economic. This is not political. This is generational.
If this was you, then allow yourself to be angry for a moment. It’s good to sit with our thoughts. But now, I’m advising you to snap out of it. As the co-founder of investment platform Pearler and a young-ish Aussie with typical imposter syndrome, I’m here to pour some cold water on the Budget rage. Self pity ain’t us, Australia, and despite what traditional media likes to say, it ain’t our generation, either.
So here’s my honest read on this Budget week, from someone who looks at this stuff for a living.
Did much change for the average Aussie? Yeah, nah, yeah, nah… aye.
If you’re a heavy property investor with multiple geared portfolios, you’ve got things to think about, and I won’t pretend otherwise.
But if you’re a regular person trying to slowly build wealth through diversified, long-term investing, which btw is what the vast majority of successful investors actually do, the answer to “How does this change my plan?” is mostly: it doesn’t.
You were going to pay tax when you eventually sold your shares. You’re still going to pay tax. The calculation might look a bit different. That’s it. That’s the news.
If someone at the pub tries to sell you a brilliant new strategy that’s appeared this week, be a bit suspicious. If someone suggests it’s a great idea to deliberately aim for lower capital growth just to pay less tax, RUN.
Tax doesn’t define what is a good vs bad investment.
For whoever needs to hear this: in order to pay tax you need to create a gain, so let’s make sure we are investing smartly and to suit our situation (more on this below).
For anyone feeling pressured by the online hysteria: when you let tax outcomes drive your investment decisions, you usually lose sight of whether the investment was sensible in the first place.
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Tax is a consequence of making money. Making money is good. Paying some tax on it is fine. An investment that grows beautifully and triggers a tax bill is a much, much better outcome than a clever scheme that minimises tax while also quietly losing you money.
If this means you need to invest a bit longer to hit your goal (like a first home deposit), then we’ve just got to get on with it. And getting too crafty with tax is, frankly, risky business. Plenty of very famous, very rich Aussies have learned this the hard way; See here, here, here, here so don’t get any ideas (but here are some anyway). These weren’t dummies. They had accountants, lawyers, advisers, the lot. And the ATO still came knocking.
I can’t speak for the billionaires and oligarchs. But the richest, smartest investors I know don’t optimise for tax. They optimise for owning good assets for a really long time. The tax mostly takes care of itself.
The good news: there is no secret trick.
I think the most damaging vibe of every Budget week is the creeping feeling that there must be a Secret Rich Person Hack you’re missing out on. Some loophole. Some structure. Something your accountant’s accountant knows.
Here’s the actual good news: there isn’t one. And that’s massive, because it means this stuff is completely within your grasp.
When clever workarounds do appear, the government closes them — that’s literally what a lot of Budget changes are. They’re not the government stealing your future. They’re keeping the playing field roughly level so the same boring, repeatable, long-term strategy that works for someone with ten times your income also works for you. Of course they get it wrong, but they’re not evil.
That’s incredibly empowering when you sit with it. You don’t have to be richer, smarter, better connected, or know an insider. The legal, repeatable, time-tested ways to build wealth in Australia have been hiding in plain sight the entire time. Diversify (we like low cost ETFs). Hold for ages or until you’ve reached your goal (again, first home deposit). Don’t panic sell. Add to them when you can. Pay your tax. Turn up at work and nail it. Buy that matcha. Get on with your life.
It’s not a secret. It’s just not very sexy. Which is why nobody tries to sell it to you on TikTok. But it is fully, completely, no asterisks… available to you.
Channel the stress somewhere useful
The Budget is going to do what it’s going to do. You voted, or you didn’t. The MPs will argue, the columnists will column, and the policy will either pass or it won’t. None of that is moved by you reading one more think piece this week, including this one.
What is moved by you, right now, is whether you spend the next hour learning one new thing about how investing actually works.
Not “what’s the next ten-bagger”. Not “how do I dodge the new CGT rules”. Just the basics — what are you even investing for, how long do you have, how much can you set aside each pay, what an ETF is, what diversification really means, why time in the market beats timing the market, how compounding actually compounds. The stuff that millions of regular Aussies are quietly doing every single day while the rest of the country yells about housing policy.
Get angry at the Budget if you want. Get tired of it. Get sceptical. But don’t let it live in your head rent-free, because the rent it’s charging is your peace of mind and your next decade of compounding.
Go and learn the basics instead. Future you will be very, very glad you did.
Nick Nicolaides is the CEO and co-founder of Pearler, an independently owned and run licensed Australian investing platform that has helped over 100,000 Aussies invest more than $3 billion into long-term ETFs and shares. This article reflects his personal opinions and is general in nature and whilst he cares deeply enough about the future of younger generations to quit his finance job and start Pearler, he has no idea who is reading this and he hasn’t taken into account your personal situation or goals — this is not financial advice. You should seek a licensed financial advisor if unsure.
Lead image: Getty.
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