THINK MONEY $ THINK PROPERTY $ THINK WEALTH
Think you can’t control your money?
Think Again.
find out more on our website or call us on 07 5430 4777 | www.thinkmoney.com.au
Think you can’t control your money? Think Again. Money! It is the most talked about topic in the world. It has started wars, ended marriages and created more stress in people’s lives than anything else in the world.
meet CHris Childs In this Wealthy’n’Wise edition property investment expert Chris Childs gives you her professional tips on debt reduction and creating wealth through property. • Fast Debt Reduction Reduce your debt, not your lifestyle. • Goal Mapping Get focused on what you want. • Why Property Learn the strategies, structures and solutions. • 10 properties in 10 years Our how to guide to manage the holding costs.
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While we all know money can’t buy happiness, it tends to buy a lot of the things we perceive creates it. Money certainly creates peace of mind! While we all can list many things that are more important than money, like health and family, few of us can live without it. Having enough money is the easiest way to have an easy and stress-free life, but how much is enough? I often see people just scrapping by on a single income of $45,000 and see another family just scraping by on $125,000. We all tend to live to the edge of our income. Having a good working budget, or what I prefer to call a Cash Management System, is the first step to getting control of your money. The more organized you are the more you will have – seriously! The next step is to map out what you actually want to achieve financially, and set a few goals. Again, planning and organisation makes all the difference to achieving them. After getting your personal finances under control and cleaning up any credit card and consumer debt, the next step is to look at the bigger picture of investing. The biggest secret to creating true wealth is to separate your life from your investments. This enables you to invest in many things, including property, without any impact on your lifestyle. At Think Money we help you learn the secrets of fast debt reduction, beating the banks at their own game and setting up your finance platform so you can save, invest and prosper without reducing your lifestyle. Are you ready to take control? Call and make a time to see us today. Look forward to seeing you soon,
Chris Childs
THINK MONEY $ THINK PROPERTY $ THINK WEALTH
the right advice
M
ost people get their advice about money from a bank - eg. what sort of account to open, what sort of loan to have. A bit of a laugh really, with most of the profits the banks make coming from their smallest account holders. It’s like asking the mouse where to keep the cheese! I wish I had been taught earlier that banks will tell you how to do your banking to increase their profits, not yours. Always ask someone who has money for the best way of handling it. You will earn a fortune throughout your lifetime, but you won’t be able to keep it. We have so many choices these days about how we spend our money. We are constantly bombarded with enticing advertising to tempt us to spend more than we are earning. The old saying ‘look after the pennies and the pounds look after themselves’ still rings true. The key to prevent us from digging a deeper and deeper financial hole is to learn how to get money working for
us instead of against us. Things like ‘interest free’ periods are a joke! The interest is actually prepaid by the retailer and added to the cost of the goods you have purchased. The same goes for renting or leasing small items like laptops and the like. When you work out what you have actually paid for the item, saving the money for it first would save you a fortune. The most amazing thing I have discovered about money is, the more organized you are with it, the more you have! It is strange but true! Once you have the day-to-day side of things under control you can start to concentrate on the big stuff! This is where it can get very exciting. Just as compound growth can work against you eg: just look at your home loan! Compound growth, or in the case of property, capital growth can start to make you thousands and thousands of dollars a year without any effort on your part. For example, you can earn much more capital growth associated with a property portfolio than you could ever hope to accumulate from working or saving.
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meet yaseen Hull Yaseen Hull – the big cuddly bear of the Think Money group is Chris Child’s right hand man. A mortgage broker and debt reduction specialist, Yaseen has 11 years experience in both industries. With a firm belief in structuring his clients’ finance to suit their needs and not the banks, meeting with clients on a regular basis is the secret to creating a secure financial platform. Yaseen personally prides himself on making sure our clients understand the steps to creating wealth through property, maximizing equity and reducing debt. “I love helping people. The fact that I have seen personally the damage the big banks can have on individuals inspires me to help people beat the banks at their own game,” says Yaseen.
To contact Yaseen call 07 5430 4777
the seven things about money i wish I had learnt at school... ...that would have made me a millionaire by 25.
WHERE TO GO FOR ADVICE Most people go to a bank for advice on the right bank accounts and loans to have. A bit of a laugh really when you consider their profit margins. It’s like asking the mouse where to put the cheese! I wish I had been taught to ask someone who has money the best way of handling it.
CREDIT CARDS ARE JUST LIKE GUNS A loaded gun in a playground is dangerous, but treated correctly it isn’t. Credit cards are the same. Most of us just use them to help the banks, but you can turn the tables and use the banks’ money for free and use your money to reduce your interest. This secret could have saved me thousands!
THE MORE ORGANISED YOU ARE THE MORE MONEY YOU HAVE It is a fact that if you get organised with your money, you have more of it. Bills get paid on time, you don’t waste precious money on fines, fees and overdue payments, and you make your money work for you instead of against you. A cash management program accelerates your debt reduction and wealth creation.
YOU CAN MAKE COMPOUND INTEREST WORK FOR YOU OR AGAINST YOU Saving to buy something instead of borrowing can halve the price you pay for most items. This sounds boring to us in this ‘have it now’ world, however, compound interest working for you instead of for the loan company saves you thousands. I wish someone had told me that ‘interest free’ isn’t free at all. The interest has been tacked onto the price – ask for the ‘cash’ price and see.
DEBT CONSOLIDATION CAN BE YOUR BEST FRIEND OR YOUR WORST ENEMY Consolidating credit card and consumer debt onto your home loan can reduce your repayments each month and lower the amount of interest you pay. I wish I had been told to use this extra money to then reduce the home loan much faster, and not fall into the same trap again and again – burning up precious equity that could have been used for investing.
Find out more at one of our free Wealthy n’ Wise events
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THE POWER OF SEPARATING YOUR LIFE FROM YOUR INVESTMENTS One and a half million people in Australia invest in property, only 0.5 per cent get to five properties or more. Why? They don’t keep their personal and investment money separate. I wish I had learned the key to successful investing and stress-free living was to keep these sides quite separate from each other.
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NOT TO ASSUME A HOME LOAN IS A LONGTERM DEBT I wish I had been taught that a home loan doesn’t have to be a stone around my neck for 25 years, or best case, if I paid weekly or fortnightly, 17 years. What most people don’t know is that handled correctly a mortgage should be paid off in five to seven years just by doing your banking differently.
THINK MONEY $ THINK PROPERTY $ THINK WEALTH
Chris continues to cover each of the 7 things about money over the next editions of Wealthy and Wise.
vCREDIT CARDS Most people that I meet who aren’t in too much trouble with consumer debt* often proudly announce they have never had or don’t use a credit card, or had one and now they have paid it off have cut it up and will never use it again. While I am not advocating maintaining a credit card debt and paying high interest I am advocating the benefits of using credit cards wisely. By using a credit card, and paying it out on the due date, you will pay no interest. At worst, there will be an annual fee. However, the benefits can be amazing.
between 9% and 20% and mortgages attract 6%-8% depending on the terms of the mortgage. Should you use a credit card wisely, you would put all of your normal spending on a credit card while offsetting your cash against a loan or mortgage. This will in effect mean your money is saving you the interest rate charged – or be actually earning the same amount.
Take into account the fact that the banks pay very little interest on money you accumulate in a savings account, yet charge high interest on any money you use of theirs.
This same principle can be used when considering savings accounts, Term Deposits and even your children’s savings accounts. Mortgages are covered in the eBook, however should you be using an offset account or a line of credit as part of your mortgage plan, any excess money you have that is sitting doing nothing much in the bank, could be earning a much higher rate by investing in your own mortgage.
Credit cards can incur interest charges in excess of 25%, personal loans are mostly
I have seen this reduce mortgages from 25 years to a mere 7 years or even less.
use the banks’ money for free and use your money to reduce your interest Get in touch!
for an app ointment please go online or call o ur office :
thinkmoney
.com.au
Call 07 543
0 4777
*Consumer debt is another term for non productive, or non deductible debt usually from purchasing furniture, holidays etc.
The complete e-book is available online at thinkmoney.com.au or Call 07 5430 4777 to get your copy.
what our clients have to say Mitchell Adams Twenty-two-year-old Sunshine Coast father of one, Mitchell Adams runs the family electrical business and like a lot of people running their own company, struggled financially. That was until Mitchell saw an article offering a free consultation with Think Money. He says, “I went in about a year ago and spoke with Chris [Childs]. She asked me
what I wanted and I told her I wanted 10 properties in 10 years. I wanted to be financially independent to do what I want when I want.” Sounds like a big ask, but with the expert help of the Think Money team, Mitchell was able to break into the property market. He now hopes that by the age of 35, he will be financially independent to choose whether he works or not.
“I knew a little bit about investment but I learned so much more from going to the workshops with Chris CHILDS” Toni and Tim Ferris Beerwah couple, Toni and Tim Ferris, were sceptical about accepting any financial advice due to being burnt previously. The couple finally discovered CHris Childs and Think Money and have never looked back. The Think Money team helped the couple convert their home loan to a line of credit, showing them how to use credit cards “the right way”. They are now working independently from any government payments and have future proofed their retirement, free from debt.
Debbie and Warren Eckhoff With credit card debts, store cards and a bad investment under their belts, Little Mountain couple Debbie and Warren Eckhoff could see little light at the end of their financial tunnel. That was until they spoke with the team at Think Money who helped turn their world around. With sound advice Debbie and Warren have built a strong property portfolio. Debbie says, “Chris set everything up separately from our daily lives, whereas before we were stressing about food bills. Now, our lifestyle hasn’t changed but we seem to have heaps more money.”
Verilyn Horton Caloundra resident Verilyn Horton has been single for six years, and like many women in her position, she had little to show for it financially. However, thanks to the Think Money team, Verilyn has taken control of her finances and learned to make smart investment choices. Verilyn says, “I knew a little bit about investment but I learned so much more from going to the workshops with Chris (Childs) – you’ve got to keep going to build on those things. I just love learning more and more.”
Video testimonials are available online at thinkmoney.com.au
Jack Childs 5 Reasons why property is a smart investment in 2014 01
Safe as houses
There is a reason why “safe as houses” is a well-known saying: it’s true. According to research by AMP, Australian property has increased in value at a rate comparable to that of the share market since 1926 – an average of 11.4 per cent per annum, despite a succession of wars, disasters, recessions and crises. More importantly, it has done so without the volatility of the share market too. It’s a bricks and mortar investment, something you can touch and feel that can’t disappear.
02
Tax Breaks
There are huge benefits to having a tenant and the tax man pay off your investments for you. In some cases, even the most conservative property can turn into a cash flow positive wonder after tax breaks. Let’s look at a few. Depreciation One of the most underrated and overlooked tax benefits is depreciation. This works best when you buy or build a brand new property. Depreciation on a $500,000 property can vary between $10,000 and $25,000 per annum tax deduction, depending on the quality of fixtures and fittings. This costs you nothing and is like a gift from the government. It certainly makes the choice of buying new versus old almost obsolete. New usually wins hands-down! Claimable expenses
03
Secure growing income in retirement
Moving on from super to retirement, the biggest positive about investment property is that it continues to grow; therefore your income in retirement will grow. Most investments start to retract when you retire and start to live off the proceeds. With properties increasing in value, so does the rent, leading to long-term increasing income in retirement. The kids don’t miss out either. Property forms a huge wealth handover in estate planning. Property enables you to live well in retirement and still provide an estate for the security of your loved ones. All in all, property is one of the biggest wealth creators in Australia.
04
You can use leveragE
Using other people’s money to make you money is one of the biggest benefits of investing in property. Banks will lend up to 90 per cent of the value of a property, which means a $50,000 investment can change into a $500,000 investment. The great part of this is you will earn, in the above example, 11.4 per cent on the whole amount. For example: Eg $50,000 x 11.4 per cent = $5,700 $500,000 x 11.4 per cent =$57,000
05
Property is flexible – Investment styles
Using the right accountant can make a difference too. There are a number of things that could be claimed that are often overlooked, including stationery and computers to travel. It’s worth taking stock of Property is a remarkably flexible investment. No matter what your financial what is being claimed on your tax now – review this with your accountant aims are, you should be able to find an investment strategy to suit your to make sure you aren’t missing anything. needs. For example: Negative gearing
Long-term capital growth
Another gift from the government is the fact that if your investment is making a loss instead of a profit, the loss is considered tax deductible. That means if you are on 30 cents in the dollar you will get back 30 cents on every dollar you have paid tax on. It is important to note that negative gearing and the subsequent tax deduction should be considered a bonus, not the purpose of the investment, for two reasons. The first reason is that it isn’t worth throwing away $1 to get the 30 cents back. The second is that the government can change the rules at any time. So while you are building a property portfolio, treat the tax effectiveness as a bonus and always buy the best investment with the best growth potential, rather than trying to maximise tax benefits.
If you have time, it is the best way to build a retirement nest egg. Property has historically proven to deliver capital gain. Choosing the right area at the right time, with the right supply and demand ratio and demographics, can magnify your results. This forms an important part of property research.
Superannuation Self-managed super funds (SMSF) are becoming very popular. More and more people are taking control of their own superannuation because it gives them the ability not only to get more involved with their own investment choices, but also to invest in property due to the changes in legislation regarding borrowing within super. Until this option became available, most were stuck within the confines of managed funds and corporate super.
Positive cash flow By choosing properties where rents outweigh holding costs, you will have the ability to ‘hold’ more properties in your portfolio. However, this sometimes comes at the cost of higher risk and the possibility of volatility. It is important to look at all aspects of the investment and have plans in place to mitigate those risks should something change. Adding value There are many ways of adding value to a property to increase equity, therefore increasing the opportunity of buying more. Renovating, subdividing and changing the use of a property are just a few ways to do this. A word of caution – it is vital to do a feasibility study before buying the property. It is amazing how much these things actually cost, and often the sound of it is much better than the actual financial result.
march events
Property Wealth Workshop & Think Investment Realty Property Showcase Tuesday 4 March Specialist Workshop Tuesday 11 March
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Think Investment Realty Property Showcase & State of the Nation Wednesday 12 March
Goal Mapping for Wealth Full Day Workshop – Mantra Mooloolaba Saturday 22 March
Think Wealth 4 Women Education Event Tuesday 18 March
Goal Setting for Wealth Education Tuesday 25 March
TUEsday 18 MArch
FROM 6pm - 8pm | maroochydore RSL
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Free education event Come along and find out exactly what you can achieve in 5 years.