Last night Scott and I had the pleasure of meeting with 25 clients and others interested in our perspective on the 2007 Budget. Scott also spent some time explaining how index funds work. We had a great evening and hope those in attendance enjoyed it as much as we did.

A few of the main points from our budget summary included:

• Tax cuts from July 1, 2007 of $150 for anyone earning below $25,000, $1,100 if earning $30,000 - $40,000 reducing to $750 for anyone earning $48,750 or more
• Increases in income that recipients of the Senior Australian Tax Offset can earn before paying tax, now $25,867 for singles and $43,360 for couples
• Doubling of the government co-contribution for those who made an eligible contribution in the 2005-06 financial year

The government also painted a fairly rosy projection of economic conditions up until June 2011 with economic growth to continue on at 3%, unemployment to remain low, and inflation to be around 2.5% (smack bang in the middle of the Reserve Bank's target range).

So what are the key messages for investors?

We believe that what the budget is telling us all that if we do not take the chance to improve our financial situation now (while all the moons are aligned!!) then it is going to a lot harder when conditions are not so positive.  Take the lead from the government which

• Spends less than it earns (government surpluses)
• Gets rid of debt (government debt all but eliminated)
• Invests in growth assets for the future (Future Fund & Higher Education Endowment Fund.)

We hope that you received some good news from the budget.  If you would like more detail please get in touch or have a read of Scott's article in the Eureka Report - More Cash for More Investments.

Regards,

Scott Keefer