We woke up in the middle of the night about our advice to you’.

‘We woke up in the middle of the night about our advice to you’.

Yes that is what we said to Anthony* when we were presenting our advice document SOA to him this week.

Anthony* replied that as he didn’t want to wake up at night considering his financial  situation then that is what we are for. He wanted to meet at ‘trigger points’ and his birthday was one.

We also read this from a global health  newsletter  that all should subscribe to  as your health is even more important than your wealth.

The leading causes of stress for Americans are financial concerns, beat out work, family responsibilities, and even health concerns.

Stress in America Caused by Money

We just want & Anthony* expects us to optimise his position & have his best interest in our advice.

He called it the end game but we trust that is some time away.

We advised a tune up for him which in summary is this

Cost Savings

• You will reduce your administration costs of your overall superannuation portfolio by $446 p.a.
• Implementing this strategy will reduce your personal tax payable position by $2,250 therefore providing surplus funds in the first year of $2,250 to further reduce your mortgage.
• Your superannuation will be moved into a tax-free environment.  Based on current legislation, earnings generated by your underlying investments whilst in the accumulation phase of superannuation are taxed at 15% whereas in the pension environment, earnings are 100% tax-free. This will result in significant annual savings within your pension account.  For example, based on a 4% annual income return within the pension account you will have tax savings of approximately $900 p.a. within this account.

 And

Manage Your Debts in an Effective Manner

·         You will reduce the term of your loan by one year.

·         You will reduce your interest paid over the life of the loan by $1,503

·         ‌The sooner you are able to reduce or eliminate your liabilities, the sooner you are able to create wealth to eventually provide for your retirement.

What is the total over the next 10 years although we will achieve even more when he turns 60?

We also had Margaret* call us from our website.  She had never seen a financial adviser before & after our conversation  she should have years ago.

Listening to her outflow on banks, tenants & investment properties suggest to us that if she had seen us or another financial adviser [note many property floggers call themselves that]years ago then she wouldn’t be having this stress.

As we have said to others ‘we share the load’ but in Margaret’s* case we may be too late to do  much.

Margaret* has made the hard call to call us & we have the impression that there are so many like her out there. When they,  the baby boomers, who have these so called investment properties all start to sell then just maybe the time to buy property but generally the income from residential property is a net 2% and 8% are sold at a loss.

What is that going to do to bank share prices & hence the ASX?

Then there was our police inspector Robert*  client today who is very concerned in the next budget that all superannuation will in the future be an income stream. Yep, that is very possible & hence another reason if you are over 55 to have a chat here.

We suggested to him that he would probably be fine but for his children we better plan something else as we have actioned for him outside super.

We had William* this week call us & ask us to pick him up from the cruise ship & drop him on the Gold Coast. Yep this adviser & we guess other advisers did that even though very certainly not family. You don’t read that in the media.

But you do read this editorial  Labor has prosecuted the most dishonest, cynical and shameful political campaign in living memory

We read just now from the school newsletter

It seems that everyone agrees that school communities should have some sort of covenant, vision, mission, philosophy, or values to guide their work

And

Personalities and cultures are formed by values because, quite simply, values state what is important to individuals or businesses’.

What was the lost sleep over?

It was the decision do we use his new pension to reduce his mortgage by the maximum or minimum amount?. 

Do we reduce his retirement amount or his DEBT?

What would you do for yours?

We believe that we can generate significant financial certainty for you throughout our relationship & importantly add substantial value to ensuring you achieve all that is important & valuable to you as you have articulated to us.

If we were to sit down in three years time & looked back what do we need to do today so that you are financially & personally better off & happier.

As others do call us on 07 3848 1088 or email us or visit our websites.

John McAuliffe

Is this Your aged care problem?

Alex*has just told us that he has been very busy cleaning out his father’s house which they have just sold. It was sold because his Dad who lives alone can’t look after himself & his two sons can’t look after him either.

How common is that?

Hence father has found a placed in some aged care facility.

We don’t know the details but our initial casual discussion was that the father had nothing & hence he would not see us because he had nothing.

Apart from his house.

Now he doesn’t have that but he now has the money in the bank.

And that is the problem because Centrelink need to know quarterly or when circumstances change father’s assets & income. 

[A resident should contact Centrelink/DVA within 14 days (or preferably immediately) in the event that there are any changes to their assets/income as the client’s MTF is recalculated.]

Why so?

So Centrelink can adjust  which they pay father.

It won’t be more.

To complicate the problem even more is that Centrelink & aged care operate under different rules.

Does that surprise you?

For Centrelink that is fairly simple to define as there are asset & income calculators on Centrelink websites to tell Alex how much his father’s income drops by.

Father becomes a non homeowner for Centrelink purposes.

However aged care is a minefield & some advice is cheaper than the consequences of no advice.

As the house has been sold & the cash is in the bank then it all counts.

If the home is sold, the proceeds may be used to pay a lump sum accommodation payment, either a Refundable Accommodation Deposit (RAD) or a Refundable Accommodation Contribution (RAC). The RAD/RAC is included as an asset for the purpose of calculating the MTF.

I.e. the Means tested fee MTF goes up as the name suggests.

If Alex & his brother had not sold the house then the capped asset value of the house is currently155,823.20. There is now more than that in the bank & now all is assessed. I.e. no capped amount.

Two options that Alex & his brother should have considered are

 1.       Rent out the house as

The rental income received is exempt for both aged care and social security purposes if:

• ·          the former home is retained and rented, and
• ·          a person is paying part or all of their accommodation payments via a Daily Accommodation Payment (DAP) or Daily Accommodation Contribution (DAC).

However, the capped asset value of the home ($155,823.20 indexed)is used to calculate the MTF/MTA. If retained and rented, this strategy:

• ·          may enable the home to be retained long term for personal or estate planning purposes
• ·          assist with increasing cash flow, which may help to meet the ongoing costs of care, and
• ·          provides ongoing concessional treatment of the former home, by placing a capped asset value on it for fee assessment for aged care purposes. If financially viable, this may provide a compelling reason to retain the home and reduce the MTF.

2.       The other option could be

When a person vacates their home to move into residential care, and the home is not occupied by a spouse, the former home continues to be an exempt asset for social security purposes for a period of two years. This commences at the time the home is vacated. The income support recipient’s homeowner status is maintained

i.e.  not even rented but of course property has costs. 

 Always it is an individual problem & like all problems there might be a better solution & that is maybe the unemotional calculation & options explored.

We do present to you a table of options for you & the cost of advice as always is less that the consequences of DIY Destroy it Yourself.

We believe that we can generate significant financial certainty for you throughout our relationship & importantly add substantial value to ensuring you achieve all that is important & valuable to you as you have articulated to us.

If we were to sit down in three years time & looked back what do we need to do today so that you are financially & personally better off & happier.

As others do call us on 07 3848 1088 or email us or visit our websites.


 John McAuliffe

Crowd funding into property?

Yes a new concept in property has just arrived &  it is worth a serious look. 

Only recently we wrote of Peter being ‘sucked in’ by using his existing home equity to be a deposit on a rental property via an SMSF and all the responsibilities as trustee.

He simply can’t afford that because he on an average wage with three young children & hence his wife can’t work either. An innocent taken & now a problem for Peter that he wants & needs solved.

The problem we have is that there is a huge loan & the responsibilities of being a trustee when Peter is & must take advice from the professionals who flogged this concept to him.

We are very aware as we have been offered & never taken the 25,000 for selling a new house.

As Joe said on launching the Intergenerational report ‘it is all about Values'.

Why isn’t the new Labor Police minister looking a that??!?!

We were introduced to this new concept at our recent Professional Development day.

What is Fractional Property Investing?

It appears to us to be a version of ‘crowd funding’.

I.e. You & other investors who maybe your contacts decide to invest in a property which maybe commercial or retail or residential or industrial.

There is an ASIC approved book build process to facilitate the initial property purchase.

You choose who will be your property adviser to advise on the  initial property.

The property is managed by  independent  accredited property managers who are paid out of the gross rent. They arrange tenants, maintenance & rent collection.

As we are all aware  property is a larger sum than many have. i.e. 500,000 to 1 million or many millions.

If you have an asset allocation of even 20% in property then that is 100,000 & Peter doesn’t have that. He does have that in house equity but then risks of increasing rates or no tenants west of anywhere or loss of his income to meet the negative cashflow is only casually mentioned. 

 His house equity can disappear in a very over priced market  & in his case over valued property. 

Remember at least 8% of all property is sold at a loss even before the high costs of selling.

He should not & can’t borrow because his family needs to live but he wants real property & not listed REITS.

Yes he could have his SMSF & invest in this without all the associated challenges of borrowing within an SMSF. This eliminates the need for LRBA. How good is that?

Property interests may be acquired by a SMSF as it will be a widely held trust.

I.e. direct property without borrowing.

The solution is investing into a first ever segregated property trust where each property is contained within a sub fund.

One of the biggest drawbacks to unlisted or real property is it is NOT liquid. I you cannot sell off the back steps if you have a sudden need for funds.

However this concept  has a secondary market of other unit holders or other investors as it has ‘make a market’ Authorisations. 

These sub funds have 5 year terms & requires a 50% vote to renew. 

At any time unit holders can vote to wind up a fund & that requires a 75% agreement.

Then there is all the outsourced due diligence & administration done on behalf of investors. There is a simple end of year reporting  process.

The fund is low cost compared to the alternatives i.e. 0.8% on property & 0.2% on cash.

OK that  is an introduction to a new concept to property investing.

I.e. investing without the need for any borrowing & with better liquidity without the risk attached to listed property trusts.

We comment that  it is not on our Dealer’s Approved List yet as it is so new. However if there is enough national interest then it maybe.

If you want to know more then ‘you know what to do’ as a client’s voice mail says.

You could check this vision out.

We believe that we can generate significant financial certainty for you throughout our relationship & importantly add substantial value to ensuring you achieve all that is important & valuable to you as you have articulated to us.

If we were to sit down in three years time & looked back what do we need to do today so that you are financially & personally better off & happier.

As Peter & others do call us on 07 3848 1088 or email us or visit our websites.

 John McAuliffe