PORTFOLIO POINT: Investors have until June 30 to fine-tune their financial arrangements, and optimise their superannuation strategies.

Towards the end of May all of us should review our finances and make the necessary decisions to maximise our position at June 30. So today let me take you through my list. It’s not comprehensive, nor is it for everyone, but it is a starting point. You will remember that on Wednesday Bruce Brammall (click here) set out nine steps to sidestep the budget super spin and optimise your superannuation savings before June 30.

My starting point is also the need to maximise superannuation contributions in the year to June 30. Some people, who like me are aged over 60, will be looking to try and put $100,000 into superannuation and gain the necessary tax deduction. According to official data 99,677 people took full advantage of this opportunity last year.

For investors with substantial income but who are short of cash, it may be worth borrowing a small amount to take advantage of this opportunity because once savings are in superannuation they are taxed at 15% and there is no exit tax.

Similarly, people in younger age brackets and entitled to the $50,000 contribution should try to organise their finances this year to take advantage of that entitlement. In 2009-10 the entitlements are halved. What's more, as Scott Francis pointed out recently (click here) the existence of the government's compulsory 9% superannuation contributions means your voluntary contribution limit may be lower than you realise.

But your checklist should go much further. In particular, if you run a business turning over more than $2 million a year, provisions in the latest budget mean that if you buy a car, computer or other depreciable asset before June 30 you will gain a 30% immediate bonus tax deduction on most of the expenditure (there is a cap on cars). Note the June 30 cut-off date. You can then depreciate the asset in the normal way based on original cost.

However, if you run a business turning over less than $2 million you can gain a 50% tax deduction on depreciable assets such as cars and computers. Better still, if you are in the latter category, the 50% tax deduction applies to plant purchases back dated to late in December 2008 and going forward to December 2009.

That means that if you are an individual but are also a legitimate business you will need to juggle your tax deduction priorities between superannuation, cars and computers. How you do this may depend on what your taxable income actually is this year and is likely to be in 2009-10.

In other words, you may take up all your superannuation this year and then in 2009-10, when your super contribution is halved, you might purchase a car, computer or other depreciable plant. If you have the cash (and it’s often a big “if”), for those operating a business it is a wonderful time to buy a car or computer.

On wider investment issues, we have a situation where although the market is substantially below its peak levels, it has had a good rise since the lows of last March. Accordingly, despite today’s fall this is a good time to just step back and ask yourself what percentage of equity you want in your portfolio in the years ahead. Lots of people will answer that question by saying they want to continue with, say, 60–70% in equities and that is certainly the advice you will get from a large number of financial advisers, who are adamant that you should ride this market for the longer-term rebound.

There is nothing wrong with that advice but many people have not slept well at night given the level of their losses and the effect of those losses on their lifestyle. That group of people might be far better having a lower amount of equity and they are likely to live a lot longer.

Right now cash securities are yielding very low rates of interest.

I could be wrong but I can see an enormous amount of money that must be raised in Australia and around the world and it will be hard to see it raised on the current low interest rates. Already we have seen the Australian 10-year bond rate rise above 5% and there are predictions that it could rise a lot further as the government is required to issue more and more paper.

The realignment of portfolios stemming from a review of the equity content of many funds held by older people is already affecting the interest-bearing securities market. The two major recent issues of interest bearing debt, AMP and Tabcorp, are now trading at a premium on the market, showing there are a lot of unsatisfied buyers.

That will encourage others to tap the market given that bank borrowing is tough. There are no hard and fast rules about the level of equity exposure. Each person must be comfortable with the level of risk they are taking and, of course, the older the person is, the less likely they are to want to have high exposure.

BHP chairman and former National Australia Bank chief executive Don Argus believes that the strains on the global banking community and the need for capital is going to make it very difficult for the world to have a quick bounce back. If he is right then the current stockmarket has moved ahead of itself boosted by the amount of liquidity currently in the system.

Obviously, Argus might be wrong, particularly as there are clear signs that the Chinese economy is rising and this will underpin the demand for our metal products. Nevertheless, Argus is a very experienced banker and business person and rarely makes major calls that are wrong.

The post-budget limitations on the amount of money that people can invest in superannuation means higher-income people who want to retire on a level of income that is not too far short of their working income will need to make some fundamental decisions on their future method of saving.

Unless they have already injected big sums into superannuation, they simply will not now be able to get enough tax-deductible income into superannuation to build their super fund’s assets to a satisfactory level. Accordingly, they will need to explore other strategies. Here are three ideas.

• One obvious move is to invest up to $150,000 in tax-paid funds into superannuation.
• There is also the ongoing opportunity to negatively gear residential property.
• The third will be to simply save money in your own name and your spouse’s name.

The pressure to work beyond 65 will increase as people reach the current retiring age only to discover that the combination of lesser recent contributions and the lower stockmarket means that they must extend their working life.

These are all hard decisions and some don’t need to be made right now but they are matters that everyone needs to consider either before June 30 or in the months that follow.