HOW CAN A FINANCIAL PLANNER HELP YOU? FIND FINANCIAL PLANNERS www.findfinancialplanners.com.au ACN : 607 075 589 admin@findfinancialplanners.com.au
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FINANCIAL PLANNER HELP YOU?
Contents Personal Risk Protection Insurances .............................................................................................................. 2 SOME OF THE DIFFERENT TYPES OF PERSONAL RISK PROTECTION INSURANCES ARE ............................... 2 INCOME PROTECTION INSURANCE ................................................................................................................ 2 Business Expense Insurance ....................................................................................................................... 3 Key Man Insurance ..................................................................................................................................... 4 Premium Waiver Insurance ........................................................................................................................ 4 Investment & Wealth Creation....................................................................................................................... 5 Creating A Financial Plan ................................................................................................................................ 6 Consolidate or Grow my Super....................................................................................................................... 7 Retirement Income Planning .......................................................................................................................... 8 Set up or Grow My Self Managed Super Fund .............................................................................................. 9 HOW CAN A FINANCIAL PLANNER HELP YOU BUY AN INVESTMENT PROPERTY? ..................................... 10 Can a Financial Planner Provide Help Buying a Home? ............................................................................... 11 7 Steps to Get Help Buying a Home ......................................................................................................... 11 How Can a Financial Planner Help You Reduce Tax?................................................................................... 14
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PERSONAL RISK PROTECTION INSURANCES
SOME OF THE DIFFERENT TYPES OF PERSONAL RISK PROTECTION INSURANCES ARE:
LIFE INSURANCE
INCOME PROTECTION INSURANCE Income protection insurance ensures that you receive a monthly income if you are unable to work because of illness or an injury. Such insurances may be tax deductible and may protect up to 85% of your income.
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Life insurance is an ideal form of protection for your family’s quality of life in the event of your death as it pays a specified amount to your nominated beneficiaries. Depending on your circumstances and your marginal tax brackets, it can be beneficial to hold such a policy within a superannuation policy as there may be taxation advantages that you may be able to benefit from. Superannuation may also be a useful tool in your asset protection and estate planning.
TOTAL AND PERMANENT DISABILITY (TPD) INSURANCE Total and permanent disability insurance can provide you with a lump sum of money should a disability resulting from injury or sickness prevent you from being able to work again.
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BUSINESS EXPENSE INSURANCE
CRITICAL ILLNESS INSURANCE
If you are in business for yourself, how would your business be affected financially if you were off work for an extended period? Business expenses insurance covers certain business expenses incurred while a self-employed person is unable to work due to injury or illness. ‌ consider how your business would be affected financially if you were off work for an extended period.
Critical illness insurance can pay an agreed lump sum on the diagnosis of a specified serious illness such as cancer, multiple sclerosis, Parkinson’s disease, heart attack, loss of sight and many other conditions. This can assist with medical expenses not covered by Medicare or private health insurance or simply pay off some debt as part of an overall strategy to assist you in achieving a financially secure future.
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PREMIUM WAIVER INSURANCE Premium waiver ensures your premiums are paid if you are disabled or retrenched from your job.
KEY MAN INSURANCE Key man or key personnel insurance, can financially assist many businesses and their owners from the unfortunate event of key personnel dying or becoming seriously ill and unable to work. When coupled with appropriate documents such as partnership agreements, shareholders agreements, unit holder’s agreements and other business succession documents (as appropriate to your business structure), key man insurance can provide worry free financial assistance to enable the remaining stakeholders in the business to purchase (using the insurance proceeds as funding) the interests of the deceased or seriously ill owner. This benefits all involved, the business, the remaining owners and the ill owner or their family. Such insurances may be tax deductible and are a ‘must have’ for those businesses that rely on key personnel for their success.
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A Financial Planner should recommend personal insurances from reputable insurers that do their underwriting process up front to seek to ensure that in the event of a claim, you will be covered. As with all insurances, some policies are better than others and some great policies may not suit your particular needs or circumstances (which is why online applications – although easy – are rarely suitable). In addition to personal insurances, Find Financial Planners offer a free referral service to general insurance brokers to assist you to insure your home, investment property, cars, boat and any other item of value.
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INVESTMENT & WEALTH CREATION
PORTFOLIO MANAGEMENT How involved do you want to be in the daily management of your portfolio? Financial Planners offer a range of portfolio management options which allow you to choose the right level of service for the daily management of your portfolio.
INVESTMENT STRATEGY The best way to accumulate wealth is by getting your money and assets to work for you. A Financial Planner can advise you on the types of investments that are suitable for you depending on your investment goals and the timeframe of those goals. Investments can range from real estate to direct shares, managed funds to investment bonds, self-managed super funds to term deposits.
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WEALTH CREATION The key to successful wealth creation is to set clearly defined, realistic goals and to then design an investment plan that will help you to achieve those goals. Financial Planners can help you design a tax effective plan and an asset allocation strategy (including determining the proportion of shares, property, bonds and cash) that is tailored to your individual circumstances which will take into account the length of time you will be investing and your willingness to accept volatility in your investments.
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CREATING A FINANCIAL PLAN
SHOULD YOU USE A FINANCIAL PLANNER? Why leave your financial success to chance? You wouldn't build a house without a plan, or take a trip without a map, right? Your financial well-being is far too important a topic. It is important to have a handle on where you are and where you are going.
Financial planning is a comprehensive process for setting and prioritizing your financial goals. It involves any or all of the following topics, Investments, Retirement Planning, Estate Planning, Tax planning and Insurance. Financial Planners advise clients on ways to save, invest, and manage their assets. Financial Planners can address a specific financial goal—such as readying yourself to buy a house—or give you a macro view of your money and the interplay of your various assets. We believe it is important for everyone to have a sound financial plan.
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As you get older, busier and (it is hoped) wealthier, your financial goals – and options – get more complicated. A financial planner can help save you time. Financial planners can also help you remain disciplined about your financial strategies. Procrastination can cause all sorts of money problems or unrealized potential, so it helps to have someone on your team to help you stay on track.
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CONSOLIDATE OR GROW MY SUPER
SALARY SACRIFICE Salary sacrifice is a tax-effective strategy whereby an individual can invest greater levels into their super to boost retirement funds. This is achieved by making pre-tax salary contributions to super above the usual superannuation guarantee amount. These concessional contributions are exempt from income tax and are taxed inside your super fund at a flat contributions tax rate.
SUPER CONSOLIDATION If you have a number of superannuation accounts, you’re probably paying multiple sets of fees. This can mean a significant difference to your final super balance, not to mention all the time you spend dealing with multiple sets of paperwork. It makes sense, both practically and financially, to consolidate your super into the one account. With all your super money together in one place, it’s easier to follow and get a clearer picture of how it’s performing. Plus, by reducing unnecessary fees, you can give your super the power to really grow!
TRANSITION TO RETIREMENT STRATEGIES Transition to retirement strategies take advantage of superannuation rules that allow those aged over 55 who are still working to make pre-tax salary sacrifice deposits into super while rolling some or all of their superannuation balances into a non-commutable allocated pension. This provides a regular tax-effective income stream from super combined with your (reduced due to salary sacrifice) take home pay. The tax treatment of these arrangements allows super balances to be boosted greatly in those pre-retirement years without sacrificing your lifestyle. You can also take advantage of other government incentives like co-contributions and spouse contributions to boost your super and earn tax offsets if they suit your circumstances.
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RETIREMENT INCOME PLANNING
Time is money, even in retirement, and 20 years or more can be a long time to have to support yourself. Compared to previous generations, we are now retiring earlier and living longer. Of great concern is the fact that many people don’t have enough money to support themselves throughout their retirement years, often having to decrease their standard of living in order to make ends meet. Planning for your retirement can begin at any age. It is better that you start planning sooner rather than later as this will provide you with more opportunities and better results. Financial Planners can assist you in determining and refining your pre and post retirement goals. When you leave your job, you will receive a number of different payments. How you use those payments could have a significant impact on your financial security and your lifestyle, now and in the future. Financial Planners can design a plan that will help you to make the most of those payments – from generating competitive investment returns to maintaining a secure income in retirement and minimising tax and, if appropriate, qualify for social security benefits. Retirement does not always mean leaving the workforce. Some people choose to continue to work or work part-time well into their retirement and there are advantages (particularly in the areas of taxation) to be gained from implementing proper strategies to deal with that retirement income (including roll-overs, salary sacrifice and super contributions). If you are retired or planning to retire, a Financial Planner can assist you with enquiries about maximizing your social security entitlements.
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SET UP OR GROW MY SELF MANAGED SUPER FUND
A Financial Planner can help you with your Self-Managed Super Fund (SMSF) with the following services: • • • • • •
WHAT IS A SELF MANAGED SUPER FUND?
Establishment of SMSF Investment Strategy - review and implementation Investment Advice and Opportunities Strategic Planning Trust Deed Review Pension Planning
A Financial Planner can assist you with the establishment and ongoing management of your SMSF and put in place the most appropriate strategy to suit your specific objectives and goals. We can also assist you with understanding the benefits, obligations and responsibilities of this type of structure.
Self-managed super funds (SMSF) are the largest and one of the fastest growing super segments in Australia. An SMSF is one where you, as a trustee and member, have responsibility over the management, investment and administration of your super fund. SMSFs are quite different from other super funds because they’re run by you, for you and any other members of your SMSF. SMSFs are established for the purpose of building retirement savings.
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HOW CAN A FINANCIAL PLANNER HELP YOU BUY AN INVESTMENT PROPERTY?
HOW CAN A FINANCIAL PLANNER HELP They can: • • For many, once the family home is paid off – or a reasonable amount of it – they start to look at other ways of building wealth. Often their first thought is an investment property.
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COMMON QUESTIONS TO CONSIDER
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Some questions you may wish to consider include: •
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Is it better to put all my spare money into paying off my mortgage or should I consider other investments? Am I better to invest my extra money in property or shares? Are there tax advantages to owning an investment property? Do I have to pay tax on an investment property? Are there other ways I can invest in property, apart from directly buying a property myself? Am I better off investing directly in property or managed funds?
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Identify options to fund an investment property. Look at realistic amounts you can borrow based on your current financial commitments and plans. Set a budget to cover your mortgage commitments. Advise on strategies to minimise tax. Review, recommend and organise appropriate insurance. Recommend if you need to create or review your Will.
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CAN A FINANCIAL PLANNER PROVIDE HELP BUYING A HOME?
7 STEPS TO GET HELP BUYING A HOME Below are seven steps on how to get help with buying a home. When it comes to financial planning for home buying, you’ll want to do the following:
You probably already know that a Financial Planner can help you with budgeting, planning and saving for retirement. But you might be wondering, “Can a Financial Planner provide help buying a home?” The answer is yes. Financial Planners work with individuals and families to meet their short- and long-term financial goals by taking a big-picture approach that incorporates everything from cash flow to investment analysis. Not only can they help you with buying a home and financial planning real estate, they can make sure you don’t spend too much on the home or make questionable financing decisions. After all, you don’t want your dream of home ownership to end up being a financial nightmare.
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1. Find the right financial planner. The first thing you want to do is find a financial planner who has experience with people like you. This is where Find Financial Planners excels. 2. Create a financial plan before you even begin looking at real estate. One of the keys to getting the lowest mortgage rate is to have good credit. If you have a low credit score, a financial planner can help you make a plan to beef it up. For example, if your credit is bad because you have too much debt, a planner can help you manage your debt by giving you tips on how to budget and pay off your loans.
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7 STEPS TO GET HELP BUYING A HOME
3. Start working on that down payment. Once you’ve got any outstanding debt under control and an improved credit score, you’ll want to start saving up money for a loan down payment on your home. The more money you put down on the house, the less money you’ll have to borrow. And if you can put down at least 20 percent, you may not have to pay private mortgage insurance. Your financial planner can work with you when it comes to budgeting for buying a house. With his or her help, you’ll be able to pay down debt and put away enough money to cover both the down payment and the closing costs associated with buying a home.
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4. Figure out how much home you can afford. While your lender will approve you to borrow up to a certain amount, borrowing the maximum is not always the most prudent financial move. Moving into a new home and discovering that you’re suddenly house poor can making living there less pleasant. If you need help deciding how much money to borrow, ask your financial planner. Your Financial Planner can work with you to go beyond the basic debt-to-income ratios to set a realistic price range in which you can comfortably buy a home and continue progressing toward other long-term financial goals, like retirement or paying for your kids’ education. Remember that your home is a place to live, and the financial crisis taught us that it can’t always be counted on as an investment.
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7 STEPS TO GET HELP BUYING A HOME
5. Weigh your mortgage options with your planner. Now that you’ve got a great credit score and money set aside for your down payment, getting that mortgage should be a breeze. But, you’ll still need to decide which type of mortgage is best for you. With mortgage rates still at historic lows and interest rates predicted to go up, it’s probably a smart bet for most folks to stick with a standard 30-year fixed mortgage. Still, a financial planner can help you evaluate whether other options might be the best fit for you. For example, boomers aiming to retire soon might want to trade higher payments for a lower rate and a shorter-term fixed-rate mortgage, while someone buying a starter home and planning to trade up in a few years might benefit from an adjustable-rate mortgage.
6. Work out a budget for your new costs. Don’t expect to say goodbye to your financial planner once you’ve moved into that home. After a few months, you’ll get a sense of your actual monthly costs for the home. You might have to include things you didn’t factor in, such as pool maintenance and lawn care. Your financial planner, however, can help you readjust your budget to account for those new costs while keeping an eye on the rest of your financial goals. 7. Check in with your financial planner before making any financing changes. Even if you chose the right mortgage, your needs might change as you hit other financial milestones. A planner can help you decide whether it’s worth refinancing in order to get equity out of your home or if it’s a smart move to get home equity financing to make pricey improvements, such as putting on a new roof or renovating your kitchen. Working with a Financial Planner can provide you with an objective and an informed third-party opinion on what might be the biggest purchase of your life.
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HOW CAN A FINANCIAL PLANNER HELP YOU REDUCE TAX?
2. Transition to retirement It is common these days for older workers to gradually reduce their working hours and ease into retirement. If this sounds like you and you’re aged 55 or greater, you may be able to benefit from a transition to retirement strategy. This strategy is complex so let’s break it down into two parts.
1. Reducing your income tax. Most of us don’t realise how much tax we are actually paying. For example, if you are earning $75,000 pa, you are paying around $17,000 pa in tax. Assuming you continue to work for 30 years, this equates to $510,000 using today’s tax rates. And this doesn’t account for any wage increases over the period. So how can you reduce your income tax? Well appropriate strategies will of course depend on your individual circumstances, however some ways to reduce your income tax include salary sacrificing/packaging, maximising tax deductions by keeping good records, getting the right ownership structures in place before purchasing assets (such as joint ownership, a company, trust or self-managed super fund), investing in taxeffective investment vehicles and asset classes, tax-efficient use of debt and taking out income protection insurance.
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Firstly, you start a pension from your superannuation fund to supplement your reduced employment income (remember you’ve reduced your working hours). Secondly, your superannuation fund is topped up with salary sacrifice contributions to compensate for the pension payments coming out. Generally speaking, your net income position remains the same as before, so increased income is not a benefit of this strategy. The benefit is the tax you will save. Salary sacrifice contributions paid into your super fund and pension payments paid out of your super fund usually attract less tax than your regular salary. This means that less tax is paid on your income using a transition to retirement strategy. But where do the tax savings go? (remember
your net income position remains the same as before). The tax savings end up in your super fund, meaning more money towards your retirement and less to the tax office.
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HOW CAN A FINANCIAL PLANNER HELP YOU REDUCE TAX?
3. Reduce Capital Gains Tax (CGT) CGT applies when you sell an asset for a profit. If the asset has been held for less than 12 months you will pay tax on 100% of the profit. If the asset has been held for 12 months or more, the tax office gives you a discount and you’ll only pay tax on 50% of the gain. Whilst it is not possible to avoid CGT altogether (that is, it will always apply when you sell an asset for a profit), strategies can be implemented to reduce (or in some cases, eliminate) CGT after the asset has been sold. The key thing to remember here is to plan for the CGT implications well in advance. Ideally, this process should begin before the asset is even purchased by ensuring the ownership structure is correct. Assets can be owned in a number of ways; solely, jointly, as tenants in common, by a trust, company or self-managed superannuation fund (SMSF). Each structure has different CGT implications upon sale. The wrong choice here could mean that most of your profit goes to the tax office. Disclaimer – Find Financial Planners provides factual information and is a referral service. We provide general information only and we do not offer advice. We refer all insurance, financial, superannuation, and other enquiries to our referral partners who are licensed in their respective fields. You should always seek professional advice before making financial decisions. Full Disclosure Here https://www.findfinancialplanners.com.au/disclaimer/
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