It often surprises people how much benefit they can get from being financially organised. Simply by evaluating their current financial setup and making changes where a deficiency exists or a better option is available can yield both immediate and longer term benefits.
Some things are easy to change while others require a degree of initial effort but less ongoing effort, with the benefits lasting for many years.Too often people don’t take action with their finances because they feel they don’t have the time or lack the expertise to identify deficiencies and better options. This is where assistance may be required.
Some of the areas we look at with our clients are:
Personal Banking
For a married couple ensuring that interest earning savings accounts are in the name of the lower income earning spouse, to minimise tax.Where a mortgage exists, ensuring that the interest rate is competitive. Where it is not, a call to the bank can often result in a negotiation to a lower rate. Where this does not work, re-financing the loan, which does take more effort, but can provide significant interest savings over many years.
Also with a mortgage, where cash flow can be found, arranging for repayments greater than the minimum. This can save many years off repaying the mortgage.
Investment Portfolio with a Regular Savings Plan
It is hard to build wealth where there is no clear place to build it. Having an appropriate investment portfolio with the right ownership is the starting point. Following this establishing a regular savings plan is the way to really build wealth. A regular savings plan is a regular commitment (usually monthly) that is added to the investment portfolio. The amount tends to be arranged via an automatic monthly direct debit into the investment portfolio. This setup allows for maximum benefit from the power of compounding investment returns.
Superannuation
A review of the current super fund to ensure it is appropriate. Looking at things such as the type of investments the fund holds and fee levels and ensuring that the level of risk is appropriate given attitude to risk and time in relation to retirement. Where there is a more appropriate fund available it can make sense to switch super funds. Possibly considering a self managed super fund (SMSF).
Consideration of whether additional contributions should be made to build wealth in a tax advantaged way. This allows for the creation of wealth in a similar manner to the investment portfolio and regular savings plan described above.
Personal Insurances
That insurance is held that protects the individual and family against an unexpected event such as illness, accident or death. The insurances considered are term life insurance, total & permanent disablement, income protection and trauma (critical illness).Income protection insurance is an area often neglected. People wouldn’t consider not insuring their $30,000 car, but often won’t insure their income earning ability, which can be worth millions over their working lives.
Estate Planning
Essentially that Wills are in place to ensure that wishes are carried out upon death and the family does not inherit a problem. Other key documents are Powers of Attorney (POA) regarding financial decisions and Powers of Guardianship regarding medical and lifestyle decisions..
