We all plan things such as our holidays, our weekends, and get-togethers with family and friends. We keep an eye on our health by visiting our doctor and dentist.Yet how much planning and forward thinking do we allocate to our financial well being? We work hard for our money and we should make sure that it works hard for us.
Financial planning is all about getting the most of out of your money. We look at how to maximise your income, minimise tax and, when appropriate, maximise Centrelink entitlements.
To achieve your goals, needs and objectives we:
Understand and identify your goals and objectives
Analyse and discuss appropriate strategies
Prepare your financial plan and implement the required strategies
Regularly review your situation
Quick Financial Health Check
Financial security isn't about any age group. It reflects how prepared you are for life events. New opportunities and responsibilities happen at every stage. Career choices, family changes, major purchases and investments all take planning and perspective.
Take this quick Wahlstrom Financial Services financial health check to see if you need a more thorough examination of your finances:
Do you know your financial goals? (Harvard Business School reports 70% of people don't have any goals at all)
Do you have a current financial plan to achieve your goals?
Are you confident your finances would survive a major life crisis?
Are you benefiting from superannuation strategies like salary sacrifice, spouse contributions, non-concessional contributions and transition to retirement strategies?
Do you know how much capital you're likely to need to sustain your lifestyle in the future?
Do you have a plan for generating regular tax-effective income now and tomorrow?
Do you know how to minimise your tax bill once you are retired?
If you dies tomorrow, are you comfortable that everything you own would end up where you would want it to be?
Are you aware of all government benefits you may be entitled to?
What is your diagnosis?
If you answered "NO" to any questions above then take advantage of Wahlstrom Financial Services' FREE financial assessment. This in-depth examination of your circumstances and opportunities puts you under no obligation to proceed any further.
In just one hour you will learn:
What your options are for planning your future
How much money you'll need to live the way you want to
How to take charge of your finances and invest well
Retirement Income Requirement - Rule of Thumb
Multiply your yearly income requirement by 20. This should give you the lump sum required to provide you with your desired income for approximately 30 years.
You live in a country where you can pay tax at a flat rate of 15% capital gains tax at 10% and when you retire you pay NO TAX AT ALL!
Every asset class has its day
Different asset classes perform better at various times and it's impossible to predict which one will be the star performer in a given year. The table below shows asset class performance over a 20 year period.
The importance of diversification
History shoes that spreading your assets and investments across various asset classes can be the best way to guard against short-term volatility in any one asset class. Whether it's short-term cash deposits, property investment or shares - you can diversify your investments based on your comfort level.
Market conditions change regularly, including interest rates, demand in property and share markets, or even legislation and policy changes. Investment performance can be influenced by these changes, even for the defensive asset classes.
Each asset class may be the best performer at different times of the market cycle. Diversifying across asset classes helps ensure that you dont lose all of your investment if a particular investment is exposed to adverse market conditions.
A balanced diversified managed fund, for example, may offer 70% growth assets and 30% defensive assets. This combination would provide growth during a strong market and help offset negative returns during a weak market by reducing full exposure to the higher risk assets.
Market movement and your investments
Investment markets tend to move in cycles. They can vary from providing strong returns year after year (also known as bull markets) or to bear markets where stock markets are declining. Bear in mind that markets can, of course, be quite alarming and challenging for investors.
It is important to recognise that investing is generally for the medium to long term, and understand there will be periods of both over-performance and under-performance.
Those with shorter time horizons and lower acceptance of rick often opt for more conservative asset types that are less prone to market movement, such as cash and fixed interest.
It can be tempting to react to market volatility by jumping in and out of certain investments. But timing the market requires you to make two correct decisions that are very difficult to make; exactly when to buy and exactly when to sell.
Being out of the market at the wrong time - even it it's for a short period - can significantly reduce the overall performance of your investments and cause you to realise a loss.
Historically, markets do recover. So if you stay put and don't make rash decisions, your investment should be well positioned to benefit from any upturn.
Gearing is when you borrow money to invest. it might be for a property or shares. These are three forms of gearing:
Negative Gearing - is when the interest you pay on your borrowing is greater than the income from your investments. You can claim this difference against your tax.
Neutral Gearing - is when the income received from the investment is the same as the cost of maintaining the investment.
Positive Gearing - is when the income from the investment is greater than the cost of maintaining the investment.
When you have funds invested within the Wahlstrom Financial Services' model portfolio's you will receive Quarterly Review emails with market commentary and fund performance reporting. To view past Quarterly Review documents please click on the links below: