Planning for the Future
Financial planning can benefit everyone,
so it’s never too late (or too early) to talk to Don Brown.
By gaining an understanding of your circumstances and goals, Don
Brown can develop appropriate strategies to meet your ongoing objectives,
whether these are short-term (such as saving for your children’s
education), or long-term (such as retiring comfortably). A key to
meeting your goals is ensuring that the strategy is specifically
suited to your situation. Don Brown is client-focused and will ensure
that the strategy implemented is the right one for you and is tailored
to your situation. Of course, one of the things that influences
the strategy is where you are in your life journey.
Wealth Protection Insurance
One of the most important parts of
your ongoing financial plan is Wealth Protection. Saving and building
wealth is of course very important, but all your hard work could
be jeoparised without adequate risk insurance in place. Appropriate
risk insurance can ensure that you and your family are well looked
after should an unforseen event occur. What would happen if you
are injured, fall ill or die? Would you be able to meet the medical
expenses involved? How would your family cope without you? Don Brown
is a Risk Insurance specialist who can review your situation to
determine your risk insurance requirements and arrange appropriate
cover, such as Income Protection, Life Insurance, Total Permanent
Disability (TPD) and Critical Illness (Trauma).
Income Protection insurance will
pay you a regular income stream in the event that you are unable
to work for a period of time due to illness or injury. Income Protection
insurance is extremely important as it can ensure that you:
Are able to continue meeting your
living expenses, should you be unable to work for a period of time.
Can continue meeting interest repayments
on loans, such as a mortgage or investment loan.
Are not forced to sell down some
of your assets to meet expenses
Income Protection insurance can replace up to 75% of your gross
salary income and may continue paying you until age 65 (depending
on the terms of your insurance contract). Some policies even allow
you to insure your Superannuation Guarantee (employer) contributions,
so that you have funds paid into super whilst on claim.
Income Protection premiums are usually
tax deductible, so paying for the peace of mind that Income Protection
provides can be surprisingly affordable.
Life Insurance will pay your dependants
(or Estate) a lump sum in the event of your death. Life Insurance
can be used to protect your loved ones by:
Allowing them to repay any outstanding
Providing them with funds that
can be invested to generate an ongoing income.
Provide funds to children to meet
future costs, such as education expenses or a home deposit.
Life Insurance can give you the
peace of mind that your loved ones will be protected should you
Total & Permanent Disability
Total & Permanent Disability
(TPD) cover will pay you a lump sum in the event that you are unable
to work again, due to permanent disability. TPD payments can be
Meet medical expenses incurred
on permanent incapacity.
Pay down outstanding debts, such
Provide funds that can be invested
to generate an income steam.
Permanent disablement can be one of
the most stressful times in a persons life and TPD cover can give
the reassurance that you can remain financially secure, should
this happen to you.
Critical Illness (Trauma) Insurance
Critical Illness (sometimes called
Trauma cover) will pay a lump sum in the event that you suffer
a specific illness, such as heart attack, cancer or stroke. Critical
Illness can be used to:
Meet medical expenses incurred
on illness. Many people think that their Health Insurance will be
sufficient to meet medical expenses, however the medical and hospital
costs on serious illness can be very high. Critical Illness insurance
can ensure that these medical expenses do not become a financial
Pay down outstanding debts, such as mortgages.
Provide funds that can be invested to generate
an income steam.
Superannuation & Retirement Planning
Many people think of superannuation
as something that only those approaching retirement should think
about. However, super will be a large source of retirement wealth
for many Australians, so it is important to consider strategies
that can maximise this wealth, regardless of whether you’re
young and starting out or ready to retire. By implementing the right
strategies and investing your super wisely, you can are increase
the likelihood of a comfortable and independant retirement.
Why invest more into Super?
One of the main benefits of investing in super
is that there are several tax benefits involved. Perhaps the most
important is that the tax payable on earnings on assets held within
super is up to 15%, which can be lower than the tax paid on assets
held in your personal name outside of super (this can be up to 46.5%)
When you retire and commence a pension
paid from your super fund, there is a nil tax rate on assets in
the fund, making super extremely tax-effective for retirees.
Contributing more to Super
One of the simplest ways of building up your
super benefits is by contributing more to super. However, there
are different types of super contributions and your Don Brown can
guide you in the right direction to ensure that you benefit fully.
– most employees have the opportunity to salary sacrifice
into super. This is where, instead of receiving part of your salary
as cash income into your bank account, that portion of your salary
is payed by your employer into super as extra contributions. The
main benefit of salary sacrificing is that the contributions are
taxed at 15% as they enter the super fund, instead of being taxed
at your Marginal Tax Rate (which can be as high as 46.5%). So, if
you are on a Marginal Tax Rate that is higher than 15%, you could
potentially benefit from a salary sacrifice strategy.
Certain people, in particular
self-employed, are able to make contributions to super that are
tax-deductible. You should talk to Don Brown about whether this
applies to you.
Government Co-Contribution – To encourage
Australians to put more away into super, the Federal Government
has an initiative in place where they will make payments into
your super fund when you make after-tax contributions into super.
There are certain eligibility requirements in place, so you should
talk to Don Brown to determine whether your eligible for the Government
Transition to Retirement
If you’re aged 55 and over, you have
the opportunity to structure your super assets in a manner that
can provide significant tax savings and maximise the potential
growth of your super benefits. This can be done through a Transition
to Retirement strategy. Transition to Retirement is where you
access your super funds early, via a pension. The pension paid
out of your super fund provides an ongoing income stream that
can replace (or top up) your existing salary income. The extra
cashflow from your salary can then be “salary sacrificed”
back into super, thereby building up your super benefits.
The most tax-effective source of income
for retirees is an account-based pension. An account-based pension
is an income stream paid from a superannuation fund following
retirement or cessation of employment. Account-based pensions
are tax-effective compared to other sources of income because
the Government has provided several tax concessions to this type
of investment. These tax concessions include:
No income tax is payable on the
pension income for retirees aged 60 and over.
Income tax is payable on pension
income for retirees aged less than 60, however this income receives
a 15% tax rebate for those aged between 55 and 60.
The earnings on assets owned
within an account-based pension is not taxable.
No capital gains tax (CGT) is
payable on assets sold by an account-based pension.
When you’re planning for
your future retirement, it may be beneficial building up your super
benefits so that you can enjoy the tax advantages of an account-based
pension when you retire.
Super Fund (SMSF)
For those who wish to have greater control over their super, or
increased flexibility, a SMSF may be appropriate. However, this
extra control and flexibility comes with extra responsibility. A
SMSF is not suitable for everyone, and Don Brown will be able to
refer you to a SMSF specialist,should you be interested.
The Australian Government provides substantial support to Australians
through Centrelink. For retirees, this assistance is mainly in the
form of the Age Pension. The Age Pension is designed to provide
income support to Australians who cannot fully support themselves
financially in retirement.
Age Pension recipients may also
be eligible to receive the Pensioner Concession Card, which provide
a wide range of benefits, including discounts on public transport,
utilities and pharmaceuticals.
Other Centrelink support available
to retirees includes the Comonwealth Seniors Health Care Card, which
provides a host of benefits, such as discounts on public transport,
utilities and pharmaceuticals. Retirees who do not receive the Age
Pension may be eligible to recieve the Card, depending on their
Determining the level of Centrelink
support you are entitled to can be a complex calculation. Also,
there are strategies available that can potentially increase your
level of Centrelink support. Don Brown can assist you through this
Wealth creation is not just about
deciding where to invest your funds; it is also about devising strategies
that will meet your long-term financial goals. There are various
strategies and principles that Don Brown may adopt to help you build
your wealth over time.
a Savings Plan
It can often be difficult to keep track of expenses and most people
find that they have very little left at the end of the month for
savings. As a result, we find that many of our clients benefit from
setting up a regular savings plan. Rather than waiting to see how
much you have left for investment at the end of each month, a regular
savings plan is a strategy where you invest part of your salary
before other expenses.
The great thing about a regular
savings plan is that it us a disciplined way of saving, as you can
organise for a set amount to be deducted from your bank account
or salary each month for investment. In addition, the sooner you
start saving the better, as it means you’ll have longer for
the effects of compounding to take effect.
Savings plans can be used for a
host of goals, including saving for children’s education cost,
for a home deposit, or on that dream holiday you’ve been wanting.
and Managing Cashflow
One of the simplest, yet effective strategies
in building long-term wealth and meeting future goals is to review
your Budget and Cashflow. This can help to meet future lifestyle
and financial goals by:
Identifying areas where you can
make extra savings and improve your cashflow.
Structuring your salary package
(through salary sacrificing or transition to retirement) to invest
your savings in a tax-effective manner.
Don Brown can help you review your Budget and
Cashflow to find areas of potential saving.
One of the most common investment sayings is “don’t
put all your eggs in one basket”. What that basically means
is that you should diversify your investments. There are many ways
of diversifying, however arguably one of the most important is by
investing in different asset classes.
This is because asset classes have
different features and often perform differently at various points
in the economic cycle, so that when one asset class is underperforming,
a complementary asset class offsets this through strong performance.
Historically, we can see that it
is extremely rare for a particular asset class to be the best performer
two years in a row. It is even more difficult to predict which asset
class will be the best performer next year. So, rather than trying
to pick between the asset classes, the safest strategy is to diversify
between them. Asset classes include:
Don Brown can carefully assess
your attitudes to risk, so that the blend of assets recommended
to you are is a mix that you’re comfortable with.
Managed funds are one of the most efficient ways of investing your
savings. This is because within a managed fund you can indirectly
access a wide range of individual investments, even with as little
as $1,000. For example, an Australian share managed may invest in
up to 60 or more individual Australian companies, which provides
an excellent way of diversifying into the Australian share market.
There are also managed funds available
that allow you to invest in all of the major asset classes listed
above, all within the one fund.