The Tax Office urging university and other tertiary students to sort out their super - which, if they do, will cost it revenue - sure isn't something I would have expected.
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And even though writing about super is an occupational hazard of mine, not even a fogey like me would tell young and impoverished uni students to think about super, let alone bung more into it.
Stop me if I'm doing the same, but super is taxed at a flat 15 per cent - both when it goes in salary sacrificed and then while it's there for donkey's years - instead of your marginal tax rate. Once you earn more than $18,200 a year, super saves tax.
Mind you, it isn't being entirely selfless by suggesting the first thing you should do is get a tax file number and tell your super fund what it is. Once you're on its books it can track you for the rest of your working life.
Still, it'll also save penalty tax later and one good turn deserves another.
Anyway, while you're thinking about your future, there are some rules I swear by that make it easier planning for things such as a holiday or saving for a home deposit. The beauty of them is, they're mathematical so always apply.
Take the rule of 72. No, that's not a suggested retirement age - though the way Joe Hockey is talking it will be soon enough - but a calculation of how many years it'll take to double your money. Just take 72 and divide it by 3.25 per cent which is the best online deposit rate at the moment. I hope you got 22.2 years. If you didn't, try again - we'll wait for you.
Next is the rule of 20, outlined at
mr-market.com.au, although there's another version I like that will actually help make money.
The Mr-Market rule of 20 tells you how much you need for retirement. While academic for anybody under 50 (maybe you could keep a link to this for future reference in, say, 30 years) it's quite compelling for those nearing retirement.
Take how much you think you'll need to live on (about 70 per cent of your final salary is one accepted benchmark, or you could use $58,000 a year as suggested by the Association of Superannuation Funds) and multiply it by 20.
So for $58,000 a year, you'd need $1.2 million. That'll last 33 years, by the way. If you intend living longer you'd better get cracking in the savings department.
The beauty is, this covers things such as your age, inflation and even taking out 4.5 per cent a year automatically, though it applies to essential expenses only. For an annual world trip, better check out the rule of 72 and how much extra you'd need to save.
But the other rule of 20 was formulated by Peter Lynch, the legendary former fund manager of Fidelity's Magellan Fund in the US which between 1977 and 1990 returned an annual 29 per cent. Nobody has beaten that since.
So start with 20 and subtract the inflation rate, which leaves 17.
Then you compare this with the market's price earnings ratio (share price divided by profits per share) which is about 14.5.
Since this is lower, it makes the sharemarket sizeably undervalued. To return to its norm, it needs to rise another 15 per cent.
Just one complication, though. The rule of 20 doesn't say when that might be.
Read David Potts in Weekend Money, with The Sunday Age.
