But what if one of them dies?

But what if one of them dies?

Do you want to have as a future partner your ex business partner’s spouse’s solicitor?

Does your business have a ‘business’ will?

The chance of death, total and permanent disability (TPD) or critical illness (CI) among business partners is surprisingly high.


The chance of any individual business partner or key person dying, becoming totally and permanently disabled or suffering a critical illness before age 65 is
Eg 1 Yourself Male 40 Partner male 45
35% 33%
The chance that one of you will die, become totally and permanently disabled or suffering a critical illness before age 65 is 57%.


EG 2
The chance of any individual business partner or key person dying, becoming totally and permanently disabled or suffering a critical illness before age 65 is
Yourself Male 40 Partner male 45 Partner male 50
35% 33% 30%

The chance that one of you will die, become totally and permanently disabled or suffering a critical illness before age 65 is 70%.

No doubt you have insured your Car, Home & Contents.
Why not insure your most valuable asset.....you and your business partners!

Where does the $ = money come from?

The problem

While the business owners are alive, they can at least negotiate a buy-out amongst themselves, for example on an owner's retirement. But what if one of them dies?

The remaining owners must now negotiate with the deceased owner's legal personal representative, who may well be more concerned about the needs of the estate rather than the needs of the business.

Many business owners mistakenly believe that this contingency has been catered for in the business' constitutional documentation. Often there is no buy-out provision; or if there is, it's usually ineffectually drawn up and inadequately funded.

Where does the money come from?

What are the alternatives?
Do you remortgage the house?
do you sell the business?
Can you borrow the funds?
Will the bank lend to you?
Do you want another business partner?
How do you pay out the heirs?

Ownership Protection (Business Succession)

Ownership Protection helps the smooth succession of the business from one owner to another and provides security for employees through the continuity of employment.
People don't plan to fail, but they typically fail to plan.

This age-old truth has particular relevance to owners other than husband and wife business co-owners, where the death of an owner can result in the end of an otherwise viable business simply because of the lack of business succession planning.

The solution

Ownership Protection can provide the continuing owners, or their nominee, with sufficient cash for the transfer of the outgoing owner's equity to the continuing owners, if a business owner dies, is disabled or suffers a critical illness.

To find out more about Ownership Protection (Business Succession), get in touch with your financial adviser John McAuliffe on 07 3848 1088

How to save $2,000 or is it $4,000+

How to save $2,000 or is it $4,000+

Yes, would $2000 or is it $4,000+ be useful in your account. You could no doubt start with 10 fast answers on a better way to use it than big government.

It is simply that the proposed NBN will cost each person $2000 in taxx. The total cost which has been suggested without a business plan or costings & maybe requiring a compulsory take up is $43 Billion which divided by 21milion is $2,000 p.p. This means for a family unit the cost could be $4000+.

Let us face it the great majority need that $2,000 or $4,000 & certainly could use it better than big brother or is it big sister. The family certainly needs at first to pay off the credit card or to reduce their mortgage. We have all seen what that does to the term of a loan.

After that the family could certainly make that fast 10 list to an easy 50 list on where to invest that $4000. E.g. shoes or a laptop for other members of the family. Whoops did we say laptops which are usually wireless i.e. not Fibre & fixed.

As Terry McCrann wrote in a full & researched column in ‘Patchwork is cover enough’. He concludes that ‘the future will clearly be a mix of a fibre core & wireless’. Terry also concludes ‘it is both fiscal & technological insanity to dump the Telstra & Optus cables that can provide 100Mbps broadband virtually right now to perhaps 1/3 of Australian premises’.

Jennifer Hewett writes in ‘Broadband takes centre stage in debate on future’ and concludes ‘The implementation study declared this possible in the very long term -- 15 years minimum -- although at very low rates of return just over the government bond rate. But this requires a very high percentage of homes -- between 75 per cent to 90 per cent -- to pay to take the service. ‘That is a very big gamble, even dressed up as vision’.

The red queen ‘Gillard defers NBN questions’ when ‘it depends what you want,'' Ms Gillard said, adding the beauty of network was that it "super fast'.

Malcolm writes ‘Seven reasons why the NBN will fail’ will ‘the most expensive network in the world’.

Michael Stutchbury writes ‘Same old election-time pork barrel for broadband and rail’.


The other demand for your taxx dollar is on health. That is a black hole which will absorb every dollar created. Hence a paradigm shift is required & it starts with the individual not making a lifetime of bad health decisions. It starts at the bus stop where we see a stylised red girl advertising a big seller in the supermarket. However it has serious downsides with fructose & aspartame ingredients. It is sweet & toxic.

We read in the W/E Australian 14 August that the blue gang has promised 21.54B & the red gang 5.5B We don’t see where the 43B is defined but we will take the Australian any time than the other gang of 2 member who is elsewhere defined in ‘There will be blood, regardless of the result’.

As a wealth coach we must & do play by the rules of the game. However the rules are made by those who don’t play the game themselves. As John Weir wrote in a letter to W/E Australian ‘it is difficult to see why being unionised would help anyone but the unions. Perhaps to an old leftie this is a virtue in itself’.

The Pareto Principal suggests 80% will vote on tribal instincts which are an emotional decision. That is good enough when your team plays sport but it isn’t good enough when voting. The head should rule the heart & the above links have rationalized the arguments.

The other 20% may listen to Mark Latham who apparently suggests spoiling the ballot paper. It is known that the green gang advocates a larger mining taxx which doesn’t help anyone including you.

We viewed this week on the BBC a programme on the most famous soccer club = Man U being in debt for $1.23B. Their owners Glasson’s have 64 USA malls in negative equity. The Gunners are up for $700m & all the rest of the EPL are in similar circumstances. You can’t do much when you are in debt.

The USA is similar with 13 Trillion & comments suggest a 3rd world country. We note that when in debt one has less power & say.

Globally & nationally & individually we need less debt. It is no use borrowing to pay down existing debt as that is the same as using the credit card to pay the mortgage.
We comment because taxx is a dead weight on your budget & hence needs to be legitimately minimised. It is fundamental that you can look after yourself better than all knowing big government. Do you waste your money?

Hence we must conclude that this $2,000 or is it $4,000+ could be much better not spent by little sister but by you.

The Sunday mail editorial writes ‘Labor administration has squandered goodwill and Abbott Coalition deserves chance’.

It is time the $2,000 or $4,000+ buck stopped with you. The NBN is welfare for tech heads.

Welcome to call on 07 3848 1088 or email or visit our websites as others have & do.

Our active wealth strategy may help you.


John McAuliffe

Renovating the House

Renovating the House

Yes we have just renovated Parliament House or rather the ALP has found it won’t sell at the forthcoming election auction shortly & hence some renovating was required. The Lifestyle Channel has been very successful with its programmes on selling houses after a makeover. Will it work for the ALP?

The owner of a house up for auction or sale is always very aware of the cosmetics they have applied to improve the selling price. So too we very aware of the cosmetics the ALP has applied to win the next term.

The owner of a house up for sale is also very aware of the problems that still exist & which are frequently structural & too expensive to fix. In many cases the house owner is keen to move & accept a lower price. However the ALP is not keen to move so do we accept a lower price.

The cosmetics have not changed the fact that underneath nothing has changed. There is still the belief that big government can do better with your savings than you can. That is the core structural problem.

It is being recognised elsewhere that at some time you must life within your means e.g. UK where they have had to bring in austerity measures after finding the rot left by the previous Brown & Blair Labour governments.

Do we want to the ALP to continue & produce the same rot as the Euro zone & the PIIGS have done. They have completed a list of failures & flip flops & they hope that Kevin Who will take it with him as he moves to the backbench & that all will be forgotten & forgiven.
Thus the ALP needs to make some structural improvements. They have trotted out many times that they saved the country from recession & saved 200,000 jobs. Where did they find that number & did they save the sale.

The structural changes need to focus on both sides of the balance sheet. I.e. in reducing the government spending & government waste & downsizing big government. They tried the taxx increase e.g. RSPT to pay back the stimulus but business & mining & you & I said there is nothing left for you to take. Enough is enough. Hence the renovation was required.

Governments in any form must do what a family must do i.e. Increase the income & reduce expenditure so as to live within ones means. This is the structural & in fact philosophical change that needs to be done. We don’t believe it is in the ALP makeup or other parties to do so. They have tried & not necessarily given up on the increase to their income & taxx take.

It also came out this week that Tony has a 710K mortgage which for whatever reason he forgot to declare. Maybe the compliance from Big brother was too big for him. Welcome to the real world. Tony certainly needs our help & needs a structural change.


His interest only mortgage will cost him $60,000p.a. which means no principal reduction?
His taxx on say 200K is say $74,000

So he has $66,000 left to live on

That’s the same struggle which most families have.

He needs our help & a structural change. Yes Tony is well off as his business expenses & superannuation are paid by yes the government. However does he have enough time to pay off that large debt? Welcome to the club Tony where many have huge debts & will need their super to pay it off when they retire or are ‘chopped’ to the back bench. When this occurs they have less super & hence even more reliant on the pension.

We only recently have had cries for help from a 60 year old with a $450,000 mortgage. How many such mortgages are on banks asset ledgers & considered prime & low risk. At some time Tony & others will realise that the bank is a very expensive landlord & hence the awaited deflating of house prices. Rental investors in the 60 year club will realise the income from their renter is insufficient & sell & lower prices will occur.

Thus we will see the structural change that needs to occur.

We suggest that many families are paying too much in taxx & mortgage to the bank. There is a structural change that can be made & it costs not to make that change. It reminds us of the analogy of the frog in boiling water. If it is cooked slowly it isn’t aware that it is being cooked.

Let’s improve yours or Tony's lifestyle as our active wealth strategy does for others

Welcome to call on 3848 1088 or email or book via our websites. Tony our lines are open & Kevin Who we may help you with your redundancy package.


John McAuliffe

It’s party time

It’s party time

Yes that’s why they are called parties. Life is a party if you are the pied piper of a political party. They are having a great time outdoing each other in showering the masses or is it the press gallery with gifts & snippets. It is the old game of ‘ours is bigger than yours’. They are also having a great time throwing mud at each other.

In fact with a sergeant at arms of a bikie gang on the cover of The Weekend Australian magazine recently there could be some similarities. Maybe these parties could be called gangs. We recall there was a so called ‘gang of four’. Could we have some state legislation to ban these gangs or parties from assembling in greater numbers than one? After all taxx is taken & allocated [wasted] in ways that you probably don’t agree with.


Hence we suggest to the ‘working family’ who needs to ‘move forward’ to read a recent email to us

Hey there John,

Anyways, yes, we have some small actions - I have asked my mother to move out of Mt Ridge, now I am doing a few odd jobs to fix the place up for renting - hopefully ready by end of Aug / Sept.

Am STILL working on my June BAS - naughty naughty - it was due 28/07, but our accountant tells me I have a week or so to get it to her.

We have put the feelers out to sell Tamborine with an agent, so fingers crossed.

Good to hear that Richard and Marilyn are going to catch up with you soon. I do hope you can work your magic with them.

By the way, it must have been a fluke, but the only way I found you, was Googling on the internet for life/income insurance way back when - now look what you are doing for us!!

Must be karma - everything happens for a reason I suppose.

Have a nice day - it's freezing here!
Jackie


We only read of today that Medibank will pay a special dividend of 300m to the government to pay for the government’s election promises. Surely Medibank policy holders would prefer a reduction in the premium of maybe 8% to fund their own requirements. Let’s remember that medical insurance premiums are another taxx as almost compulsory.

There was some good news this week with the RBA arbitrarily deciding the cost of money would be 4.5%. This means to the mortgage holder that they would only pay another 1.9% commission to their bank for their debt. Why is this commission allowed? I.e. the rate for a variable mortgage would be about 7.4%. Why did this decision occur? It is simply that everyone else, be it families or companies have been deleveraging & reducing their debt levels & not spending. We see this in weak retail figures or the low share prices of the Harvey Normans & Woolies. We also see this in the estimated 1.3 Trillion sitting in cash accounts.

Can we hope to see these parties reduce their promises & their spending? We doubt it as it goes back to ‘my ego is bigger than yours’ & we can do ‘better’ & ‘care more’ than you do. It’s called soliciting [for your vote].

On the ‘spend-o-meter’ of Weekend Australia 31/07/10 we see the red party has promised 2.53BILLION & the blue gang has promised 4.1BILLION to allocate from you to others. Ok the blue team indicates they will save 42B by scrapping NBN. The green gang promises a price on carbon, a carbon taxx. There is more nonsense than Alice in Wonderland.

Why did the central bank decide that the cost of money should be the same? It believes there is no inflation or no price increases. Well tell that to the ‘working family’ who would like to ‘move forward’ but is unable to due to the heavy price increases in everything except seasonal vegetables.
Let’s also not forget ‘Bracket creep to hit one million Australian workers' pay packets’. It’s why we spell it taxx.

We suggest that the pied pipers might read ‘Seven steps to getting the country back on track’ from w/e Australian. We accept that there is legitimate country funding requirements.

Welcome to call us on 07 3848 1088 or email us on info@wecoachwealth.com.au or book via our websites www.wecoachwealth.com.au

John McAuliffe

Submerging or Emerging

Submerging or Emerging

Submerging or Emerging was the title of a speech by Jonathon Pain from www.thepainreport.com.au at a recent fund manager presentation. It was a very simple but powerful explanation of where the global economy is & where it is heading.

Traditionally the global economy has been defined as ‘the haves’ & ‘the have nots’. I.e. the so called developed countries such as USA, Japan, and Western Europe, UK making up say the G8. Is there a common thread in government with these countries? Then there have been the so called emerging countries such as the BRIC countries of Brazil, Russia, India & China.

Jonathon pointed out the now obvious, that these ‘haves’ now ‘have’ so much debt to GNP that they are submerging in debt. The ‘have nots’ now are much less debt & hence have the facility to grow faster.

Some key points that arose from Jonathan’s presentation were;

Ø ‘Submerging’ economies will spend less and save more whilst ‘emerging’ economies will spend more and save less

Ø Emerging economies will continue to grow due to the shift in demographics (more people working), labour (more people earning wages and hence spending) and capital (more money circulating to develop infrastructure

It is the savers that are now maximising their wallets & buying up big. We note that Australian companies are being bought up by overseas companies keen to lock in the future. Hence we have seen a Singapore company buy CSR; a Thai company picks up a coal company, Indian & Chinese companies everywhere.

Where is Australia ‘the lucky country’ on this matter? This really is the choice that the electorate have facing them on Election Day.

Let’s recall that the ‘working family’ is ‘moving forward’ by reducing their debt levels where they can. This is shown up by the slowdown in retail spending & ‘home loans’ at a nine year low. What’s good enough for the gander should be good enough for the goose.

The above presentation was all about where the gander should invest in the future. Do we invest in the submerging economies or do we invest in the emerging economies. Let’s think about it.

The other debate for the August 21st is taxx. Do we need to debate it as surely you could do much more with your pay packet than some government department which may have wasted a Billion of taxx payer funds?

We observe that NZ across the ditch has made some taxx changes. Ire reduced company taxx to 28%, the top income taxx rate reduced to 33% and increased the GST to 15%. This is all so as to be competitive & to survive. Perhaps we could learn from them apart from the rugby. Don’t mention the rugby.

Let’s remember that companies pay dividends after they have paid expenses which include taxx. So simply if companies pay less taxx then they have a greater ability to grow their profits & hence their dividends. Isn’t a lower company taxx rate better for your retirement superannuation jar? We don’t understand where an MRRT would be better for our super but maybe we are labouring the point.

So where & what column did Jonathon place Australia. He did place it in the emerging column if only because it was not submerging in government debt. The choice we make at Election Day is whether Australia continues to emerge or is submerged.


As a topic within his speech Jonathon did mention the Chinese very fast train & how it would & did help growth within China. This could be something that could help Australia remain competitive. Brisbane to Sydney in 3 hours is faster than leaving for & leaving the air terminal.
We imagine & hope to do a very fast train from Singapore to London sometime.

If you want to emerge from your current financial position & not submerge in debt & taxx & invest in emerging economies then our active wealth strategy maybe for you.

Welcome to call on 07 3848 1088, email info@wealthcoach.net.au or visit our websites www.wecoachwealth.com.au


John McAuliffe