Strategic Financial Advice

Financial Game Plan

Our Financial Game Plan is tailored to your unique circumstances and life aspirations.

We start by analysing your financial situation, and then discuss your life aspirations along with all the things you want to do for yourself and your family that will require money, advice, and planning.

We then prepare detailed projections on where you are headed if you stay on the same path, and whether you will achieve your financial targets.

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Strategic Investing Plan

After identifying any shortfall in assets, or deficiency in future cash flow, we then prepare strategic advice. This provides you with the specific financial steps that you will need to follow to achieve your financial targets and enjoy the lifestyle you deserve once you finish full-time work.

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Our Success Story - Martin and Tova

As an illustration of the value provided by our Financial Game Plan, we have set out a summary of Martin and Tova, who should have an additional $34,460 monthly income in early-retirement by implementing our seven strategic advice steps over the coming decade.

Martin is age 42, is an Executive in an IT company and earns $395,000 per annum, plus a bonus of up to 25 per cent of his salary. Tova is also age 42, has her own business in the Public Relations industry, draws a wage of $280,000 per annum and receives an annual dividend of $110,000.

They have one child, aged three, and plan to have more. Tova’s parents have indicated that they will pay for all their grandchildren’s education costs.

Martin and Tova live in their three-bedroom terrace at Paddington and have no plans to relocate. In her early 20s Tova purchased an apartment in Coogee and has now paid it off.

They recently purchased an investment unit in Marrickville as “it is an expected growth area”. They borrowed 90 per cent of the purchase price to take up the opportunity.

Their assets and liabilities are:

Current assets

Value $
Home - Paddington (Joint)
2,450,000
Bank Accounts (Martin & Tova)
38,966
Apartment - Coogee (Tova)
660,000
Apartment - Marrickville (Joint)
1,200,000
Superannuation (Martin)
554,061
Superannuation (Tova)
343,381
Business Equity (Tova)
1,000,000
Less: Mortgages
-2,870,647
Net Assets
$3,465,761

Their basic living needs are $20,000 per month, and they spend $60,000 each year on an overseas ski holiday. Despite their impressive income, they have no savings as their money “just seems to disappear”.

We reviewed Martin and Tova’s cash flow with them and calculated that they should have an annual cash flow surplus of $130,000 as follows:

Current cash flow

$ pa
Net Wages & Bonus (Martin)
288,591
Net Wages (Tova)
175,303
Business Dividend (Tova)
110,000
Net Rent - Coogee (Tova)
33,000
Net Rent - Marrickville (Joint)
28,000
Less: Cost of Lving
-240,000
          Overseas Holidays
-60,000
          Mortgages
-205,123
Cash Flow Surplus
$129,771

We concluded that this surplus is likely to be disappearing on discretionary spending.

Martin and Tova have indicated that their main life goals are to have more children and to retire from work in 10 years’ time.

At that stage they want to be debt free, but “always maintain our current lifestyle”. They also stated that their overseas ski holiday “is a non-negotiable”.

Tova will sell her business at retirement and they may do some freelance work from time to time.

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Our financial analysis projects that in 10 years’ time Martin and Tova’s assets and liabilities should be:

projected assets

Value $
Home - Paddington (Joint)
4,190,331
Bank Accounts (Martin & Tova)
51,083
Apartment - Coogee (Tova)
1,128,824
Apartment - Marrickville (Joint)
2,052,407
Superannuation (Martin)
1,506,192
Superannuation (Tova)
1,071,774
Business Equity (Tova)
1,200,000
Less: Mortgages
-1,505,883
Net Assets
$9,694,728

While Martin and Tova want to retire at that point, the problem is that their rental properties will only produce income of only $75,984 by that time.

They will only have funds in their bank accounts to get them through the first quarter of retirement, and they are unable to access their superannuation until age 60.

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Should they retire early in 10 years’ time they will have a cash flow deficiency in the vicinity of $377,139 per annum:

projected Cash Flow

$ pa
Net Rent - Coogee (Tova)
41,852
Net Rent - Marrickville (Joint)
34,132
Less: Cost of Living
-304,378
          Overseas Holidays
-76,095
          Mortgages
-72,650
Cash Flow Deficiency
-$377,139

Personalised Analysis and Solution

Despite earning a combined $573,000 per annum, having three properties and a healthy superannuation balance, they clearly will be unable to retire early.

In fact, it is more likely that they will be working well into their 70s.

We prepared a Financial Game Pan that provided seven-step strategic advice for Martin and Tova to implement over the next 10 years.

The strategic advice, if followed step-by-step, would enable Martin and Tova to have paid out their mortgages by early retirement, and accumulate an additional $1.9 million in wealth than if they had continued with their current direction.

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With the same asset growth and return assumptions, we project that they should accumulate by retirement almost $11.8 million in unencumbered assets should they wish to retire early in 10 years:

enhanced assets

Value $
Home - Paddington (Joint)
4,190,331
Bank Accounts (Martin & Tova)
166,207
Apartment - Coogee (Tova)
1,128,824
Superannuation (Martin)
1,506,192
Superannuation (Tova)
1,071,774
Investments
3,708,165
Less: Mortgages
0
Net Assets
$11,771,493

By following our strategic advice, they will have a monthly income stream of $31,250 in 10 years’ time to meet their desired living needs and annual overseas ski holiday costs.

enhanced cash flow

$ pa
Net Rent - Coogee (Tova)
41,852
Investment Drawdowns
375,000
Less: Cost of Living
-304,378
          Overseas Holidays
-76,095
Cash Flow Surplus
$36,379

If you have significant assets and high income, but have debt like Martin and Tova, please don’t leave your long-term lifestyle and financial goals to chance.

CLIENT STORIES

Featured Client Success Story

We have been using Peter’s expertise in all things financial since 1990 and have always been impressed by his diligence, honesty and integrity. Our financial goals are on track under his care and we are always confident that he has our best interests at heart when making recommendations and investment decisions. We can highly recommend Peter and his dedicated team’

We have been clients of Peter for many years now. He has always given sound information in his newsletter on the performance of our investments and made appropriate suggestions as to and when they should be changed to ensure that they are performing to our needs.

I am a retired company accountant and have been comfortably living off reasonable interest and dividends until recently. A friend recommended Peter so we sought his advice to deal with the current and probably long term dilemma of low interest rates. Peter has provided my family with invaluable advice for the management of my investments both inside and outside Super.

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