If your retirement strategy depends on the superannuation guarantee and topping it up with the maximum allowable contributions in the later stages of your working career, it could be time for a rethink!

Life expectancy research now shows that a person may live 25+ years beyond their retirement age of 60 – 65 years. In 2008 the average superannuation payout for women was $37,000 and for men $110,000. Frightening figures when you think that once your super has run out, the current Age Pension for a single person is less than $17,000 per year.

Given that you may still have dependent children on your hands when you retire (yes many of our cherubs aren’t leaving home until their late 20’s and early 30’s and many couples are also choosing to have children later in life), you might need to reassess your retirement income needs!

The current economic wake up call and the above considerations should be enough to send us all back to our personal drawing boards to rethink our retirement investment options. For most of us, this needs to be addressed as a short, medium or long term strategy depending on where you are in your working career right now.

Start the ball rolling now to becoming ‘retirement savvy’ and educate yourself on your retirement options. No one else will be preparing a rescue plan for you.

As part of your retirement rescue plan, now is the perfect time to look at property strategies. Property has been a proven medium to long term investment for many Australians. Interest rates are at the lowest we’ve seen for many years and property prices are predicted to rise again. It is now certainly worth considering property investment as a viable component of your retirement strategy.

Before making decisions we encourage you to call the office to discuss how we can help you incorporate a property portfolio into your retirement resuscitation plan.

* $1,000,000 invested at 3% pa net return.

Amy and Ben – Refinanced to a better deal

Here are some reasons why you might like to call us this month!

1.Getting the “best deal”
Everyone advertises “the best deal”. But what they may omit to tell you about are the hidden costs, break out fees and other associated issues when changing lenders or loans. We have access to many lending institutions and will be able to guide you through your decision if you are thinking about your finance options right now. Don’t try to do it yourself. Ask us, your trusted finance consultant, to work through this with you.

2.Switching
You may not even need to change lenders to get better finance. Sometimes your current lender has brought out better products since you have taken out your loan. If they have introduced a better product they are not likely to let you know, well why would they? We, on the other hand, work for you – not the bank. So we will always make suggestions in your best interest, not theirs. It may be as simple as a product switch. We can help you with this. Call the office if you’re interested in us finding out for you.

3.Credit card / debt consolidation
This time of year usually starts us questioning how we can better manage our debt – especially credit card balances that creep up and never seem to get paid. Often consolidating loans can free up substantial cash. It is common for us to save our clients several hundreds of dollars each month just by consolidating a few credit cards and personal loans. Why not consolidate all of your debts into one loan? Call us to explore your options.

4.Top up that loan!

If you need extra cash, sometimes it’s as easy as taking some from the equity in your home. We get disappointed when we hear that our clients “just went to the bank” for that extra $25,000 when we could have helped them ourselves – and usually through more creative options. Once again, even small changes to your finance, like a “top up” or a small personal loan, can have severe consequences if all avenues are not explored and all changes discussed.

5.Invest
Property is a popular path to wealth. Australia currently faces a chronic housing shortage, which coupled with a rapidly expanding population has put upward pressure on rents. An investment plan is important to build wealth and secure your financial freedom. Call us for more information about your potential to invest. Get your loan pre-approved now before you go property shopping.

New regulation of the Australian mortgage broking industry has been designed to give consumers even more confidence in their brokers. You can now think of your broker as being even more of a professional in the same way you think of your accountant, financial planner or solicitor. Brokers build ongoing relationships with their clients and think of your best interests and not those of the bank.

The new responsible lending laws now make it a legal requirement for a mortgage broker or a lender, known as a credit provider, to suggest credit for a consumer that is ‘not unsuitable” based on their needs and their financial capacity.

We take our responsibilities seriously and would like to keep in touch with you at least annually for a review; but when lending criteria, finance options and personal circumstances change, it is wise to contact us more frequently to discuss your options in this ever changing market.

Help us to help you
Ask us to send you our quick Life & Finance Update form today. Then take a few moments to update us with your current life and finance situation and we will get in touch with you to talk about whether we can help improve your financial life.

*Disclaimer: This article is generic in nature. All investment decisions should be considered wisely and based on your personal and financial circumstances. Seek proper advice before committing to any course of investment action. This is not deemed as advice.

Who makes the better investor?

You might already have what it takes to be a good property investor… and it’s not necessarily a six figure salary!

Did you know that skill and experience managing a budget on a low income could make you a better property investor than some big spending high income earners?

We often meet people who are hooked on the good life: living in expensive suburbs, fancy cars, frequent dining out and overseas holidays. You’d be surprised however, at how many don’t have adequate savings for retirement or redundancy, let alone a solid investment plan.

In fact lower income earners are often the ones who knuckle down and save. Careful budgeting, motivation and discipline are very important attributes of successful investors. If you have had good practice stretching your dollar further and living within your means, you might already have what it takes.

Lower income earners also often have a more realistic view of investment risk. They know they need to do something to get a better financial future.

Many people are scared to invest because they just don’t like having debt. That’s a fair call…but you can reduce your risk.

Will you be part of the 20% that invests to secure your financial future, OR will you be in the 80% of Australians who will need to rely on some form of government support at retirement?

If you don’t act, nothing changes.

Tips to get started

Start by paying off any high interest consumer debts (credit cards, car loans etc). There would be no point earning 8% pa on an investment if you are paying 15% on credit card debt. Set up automatic deductions from your salary to accelerate repayments. “You’d be surprised at how many high income earners don’t have adequate savings for retirement, let alone a solid investment plan.”

Continue the salary deductions after your debts are paid off. This extra cash could fund ongoing costs for a negatively geared property.

Start small and don’t over extend yourself. Look for affordable properties in popular rental areas. Aim for rental income per year of 6% – 8% of the property value.

Your first property could be an investment. For many people it makes more financial sense to buy an investment property before buying a home to live in. Your chosen suburb might be too expensive for you right now, however capital gains on an investment property could help you fund another deposit down the track.

Explore deposit options. You may not need to save 10-20% of the property value. A common way to fund investment properties is to use the equity in your current home. We can also help you look for lenders who offer loans with only a 5% deposit. Alternatively, speak to family and friends about help with a deposit or explore co-ownership options.

Pay interest only on your investment loan to minimise monthly expenses. The principal will be repaid when you eventually sell the property (after you have paid off your home loan and any other personal debts).

Depreciation can make it possible. Claiming depreciation as a tax deduction (particularly on new properties) can significantly improve your cash flow and reduce the tax payable on rental income.

Don’t wait until tax time for your refund. If you are negatively gearing, take advantage of ATO rules to reduce income tax paid on your regular salary rather than claim a tax refund at the end of the year.

You don’t need to be wealthy to invest, but you do need to invest to be wealthy.

CALL US TODAY. We don’t just arrange loans. We can also help you look at property investment options suitable for your own financial situation now and in the future (e.g. calculating how much you could afford to borrow to invest or Ask us to send you our home equity you can get ahead financially with limited risk ). Ask us to send you our article “Investment properties – Are you sitting on the fence?”