Building your family wealth plan
Life’s really busy now and although retirement is still quite a way off, you want to know that your financial future is secure. You might be thinking how you can best put your assets to work for you, considering starting your own business, looking at buying an investment property and/or shares or you just want to be sure that will have enough to pay for your children’s education. This is a time when we can help you build on your financial foundations.
Once a reasonable amount of your family debt is paid down, you might look at other ways of building wealth like borrowing to invest in property and/or a share portfolio (better yet-both).
We can show you how to use your home equity to grow further wealth, pay the home loan off quicker, reduce tax, create another income stream & even retire earlier.
“Good” debt is when you borrow to invest to purchase wealth building assets – meaning assets that are likely to increase in value over time and/or give you an income. Good debt may also be tax deductible.
“Bad” debt is a loan used to purchase non-income producing assets and where the interest on the loan is not tax deductible. Using a credit card or a personal loan to fund a holiday or to buy luxury items are examples of taking on bad debt.
Should you borrow to invest?
Borrowing to invest (also called gearing) may help you accelerate the process of wealth creation by allowing you to make a larger investment than would otherwise be possible. This greater exposure gives you the potential to magnify your returns, but can also magnify your losses.
- Identify lending options to fund your investments
- Determine how much you can borrow based on your current financial commitments
- Set a budget to track &manage your cash flow
- Advise on strategies to minimise tax
- Review and recommend appropriate investment options
How we can help
Knowing how to use your existing home equity & manage your cash flow is critical to accelerating your wealth plan. We can create, structure & track your wealth plan with our Family Wealth Plan program.
Becoming your own boss or running a business
When running your own business there are a lot of things to consider, particularly when it comes to your financial situation. We can:
- Review and advise you on the specialised insurances you need to protect your income, business and employees.
- Advise on the superannuation requirements for you and your employees.
- Recommend superannuation strategies for your goals.
- Provide investment strategies and investment recommendations for your SMSF.
- Advise on succession planning for your business.
Educating the kids
A little research and planning could help you provide your children with the best possible start to their life with a good education. We can help you by setting an investment strategy to suit your goals, including the tax implications.
Choosing the right investment option
Invest some time in making the right choices. Once you’ve put some thought into your short, medium or long-term investment goals, it’s time to look into your investment options. Certain types of investments, or asset classes, may help you reach your goals in a way that suits you. When considering different investments, consider some key points.
Your risk tolerance
Your risk tolerance is affected by two key factors:
- the amount of time you have to invest
- and your attitude to risk.
It’s true that every investment involves some risk, but some are generally more unpredictable or volatile than others.
If you have a long-term goal, you may have time to ride through the market’s ups and downs and thereby even-out the impact of risk on your investment.
On the other hand, if your goal is short-term, you may choose to take a more conservative approach, because you won’t have the luxury of time. But if you’re comfortable taking risks and you have big investment goals, you may decide to invest in riskier options.
If you’re a conservative investor, you’re likely to prefer safer investment options, even over the long term.
The type of investment
Your risk tolerance will influence the type of investments you make:
- Investment type (asset class) – General risk-return level
- Cash (savings accounts, term deposits) – Low risk, possibly low returns
- Fixed income (bonds, debentures) – Low risk, investments can be linked to inflation rate
- Property (buildings, land, factories) – Moderate to high risk
- Equities (shares) – High risk due to numerous economic and global factors
We’ve covered some basic types of investments, but you could also consider:
- Insurance bonds—They’re flexible, tax-effective investments for medium to long-term goals. You can invest a single lump sum or make regular contributions to build your wealth.
- Managed funds—Your money is pooled with that of many investors and invested across a range of asset classes and managed by a trustee or professional fund manager.
- Investing in property through a managed fund or super fund—This could give you exposure to a wide range of properties in Australia and overseas, which provides you with investment diversification so not all your eggs are in one basket.