Live well: build wealth and bury debt is an Authorised Representative of RI Advice Group Pty Ltd.

Live well: build wealth and bury debt<Adviser’s Name>

<Adviser name> is an Authorised Representative of RI Advice Group Pty Ltd



My Name Financial



JV logo

6

Disclaimer

Important Notice

RI Advice Group Pty Ltd, ABN 23 001 774 125, holds Australian Financial Services Licence Number 238429 and is licensed to provide financial product advice and deal in financial products such as: deposit and payment products, derivatives, life products, managed investment schemes including investor directed portfolio services, securities, superannuation, Retirement Savings Accounts.

The information presented in this seminar is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. RI Advice Group strongly suggests that no person should act specifically on the basis of the information contained herein but should obtain appropriate professional advice based on their own circumstances.

7

About today

• Introducing RI Advice Group

• Your financial life

• Having a good plan

1. Saving

2. Debt

3. Investment

4. Insurance

5. Superannuation

• Summary

• How professional advice can help

8

Introducing RI Advice Group

• Experienced

– Over 30 years experience

– Over 80,000 clients

– Over $10b under advice

• Professional personal advice

• Advice underpinned by research and technical teams

• Over 100 offices nationwide

9

Income Capital Expenses Superannuation Cash flow

Are you headed in the right direction?

Debt

Marriage Mortgage Children Lifestyle Change

RetirementCar

You need to manage these…

To be able to afford to do this…

10

Wealth

Debt

Lifestyle- Private education - New car - Travel - Eating out - Holidays - Investment property

Survival - Loss of income - Trauma - Disability - Tragedy - Caring for grandchildren - Death

Lock in your lifestyle

- Risk protection - Estate Planning

$0

Your current situation

Where you want to be

Saving for your children’s

education?

Living in Retirement?

Cash Income Growth

Want to retire sooner?

Concerned aboutmanaging debt?

Leaving a legacy?

Value of advice

11

A good financial plan

5. Superannuation

1. Saving

4. Insurance

3. Investment

2. Debt

A a good plan – 5 key areas

12

1. Building a saving plan

Fact 25-34 year olds save more than older people BUT it’s more often for luxuries like travel than for wealth creation

Issues I seem to spend all the money that I get

I know I need to save but I just don’t know how to start…

Opportunities Analyse your financial position

- What are your goals?

- How can you save more?

- Reduce personal debt

Build a savings plan

The importance of saving:

13

Building a saving plan

Fact* A typical family spends $812,000 raising two children from birth to age 21.

Issues BIG SQUEEZE - starting a family can mean higher expenses on a lower combined incomeCan we afford to buy our own home?Super gets delayed – should it?

Opportunities Review your financial positionDevelop a planCheck your entitlements to Government Benefits

* Source: AMP NATSEM Income and Wealth Report Issue May 2013.

The cost of raising a family:

14

2. Debt management

Debts have risen!

15

Debt management

The debt burden

16

Debt management

Roll up your high-interest rate debt (eg credit cards) into a lower-rate

facility (e.g. personal or home loan)

Lower monthly interest, one payment, one statement

%

Consolidating…

17

Debt

Assets

Age 30 Age 50

Using debt to build assets

home loan margin loan

personal loancredit card

Super savingsinvestmentsfamily home

Turn debt into wealth

Debt management

Assets Assets

Debt Debt

18

no gearing

25% gearing

40% gearing

Time

Margin lending can magnify gains (and losses)Possible return with:

Assumptions: $10,000 initial investment showing gearing at 25% and 40% levels. Return 7% compounded. The impact of tax is not included.

Debt management

19

Short-term volatility is nothing new – and bad news sells!

The Australian Financial Review, 10.08.11. Pg 1

The Sydney Morning Herald, Business Day, 10.08.11. Pg 3

The Australian, 10.08.11. Pg 1

The Australian, Business, 10.08.11. Pg 23

3. Investment strategy

20Source: S&P/ASX 300 ACC Index As at 30 September 2011

Markets will always fluctuate

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

MONTHLY RETURNS AS 30 J UNE 2014

Australian Shares International Shares Australian Listed Property Aust. Fixed Income International Fixed Income Cash

Timeframe: 01/07/2013 – 30/06/2014. Data: Australian shares - S&P/ASX 300 Accum. Index, International Shares - MSCI World (ex Aus) in $A, Listed Property Trusts - S&P/ASX 300 Prop Trust, Australian Fixed Interest: Commonwealth Bank Bond Index (Pre Sept 89) / UBSA Composite Bond All Maturities Index (Post Sept 89), Global Fixed Interest: Barclays Capital Global Aggregate Index Hedged $A. Cash: UBS Bank Bill Index .

Markets will always fluctuate in the short term within each asset class.

Markets will always fluctuateIn the long term growth occur even with the short term fluctuations that may occur.

Actual indices returns: This table is based on the standard indices used by investment professionals to measure performance of asset classes. UBS Australia Bank Bill Index , UBS Australian Composite Bond Index, S&P / ASX 200 - A-REIT Accumulation Index (ASX Property Trusts Accumulation Index pre April 2000), S&P/ASX 300 Accumulation Index (ASX All Ordinaries Accumulation Index pre April 2000), MSCI World Net Index (A$). All dividends reinvested excluding fees and charges. *Non Actual Returns. The Diversified Portfolio is a portfolio constructed from the returns of these market indices with the asset allocation of: 35% in Australian shares, 25% in international shares, 25% in fixed interest, 10% in Australian property securities, 5% in cash. The Diversified portfolio does not represent any Colonial First State portfolio nor the actual returns that this portfolio achieved because it does not exist. The constructed Diversified Portfolio illustrates how such a portfolio may have performed based on the new market indices. Each Colonial First State portfolio has a different asset allocation from the illustrated diversified portfolio used above. The above actual index returns and non actual returns for the Diversified portfolio also cannot be directly compared to an individual Colonial First State fund’s return for many reasons such as they do not include allowances for fees or taxation and do not reflect the asset allocation or stocks held now or over time. Past performance is no indication of future performance. Data to 30 September 2014.

22

14Told you so

19Drat! I’ll buy in again. It’s

cheaper than last timeanyhow

15You what??

16What the???

17More crazies who aregoing to get taken to

the cleaners!

18This is it! I knew thiswas going to happen

all along!

1Ah, the price is going

up, let’s watch the market

3Damn! I missed the

consolidation, but if I waitany longer, I won’t profit

from the trend. LET’S BUY!

4Good thing I didn’t wait!

2The trend is holding - I’ll buy at the next

consolidation

9OK, let’s wait for it to recover-

otherwise this will have to be a really logon-term investment 13

It’s going to tank again anyway

8 I don’t believe it! It’s downto 8.25 It has hit its absolute

bottom!

10What is the ASX doing

about this?!?!?!?!?11

Enough! I’m selling out! And staying out

12Good thing I sold

everything!

5I’ll use this correction to increase my position...

6Brilliant! At this price, let’s

double it!

7Ouch. As soon as it

goes back up, I’m selling out!

Investing - the emotional rollercoaster

23

What the experts say about ‘risky’ markets …

“Postponing an attractive purchase because of fear of what the general market might do will,

over the years, prove very costly”

Philip A. Fisher

“Postponing an attractive purchase because of fear of what the general market might do will,

over the years, prove very costly”

Philip A. Fisher

“The stock market is like a gambling casino where the odds are rigged in

favour of the players”

Burton Malkiel

“The stock market is like a gambling casino where the odds are rigged in

favour of the players”

Burton Malkiel

“I have never met a person who could forecast the

market”

Warren Buffett

“I have never met a person who could forecast the

market”

Warren Buffett

“Don’t try to buy at the bottom and sell at the top. This can’t be done –

except by liars”

Burnard Barunch

“Don’t try to buy at the bottom and sell at the top. This can’t be done –

except by liars”

Burnard Barunch

24

Investment strategy – risk v’s return

Risk

Po

ten

tial

inve

stm

ent

earn

ing

s

Low High

HighDefensive asset classes Growth asset classes

Cash

Fixed interest

Property

Shares

25

Avoid wealth destroying behaviour

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

A balanced investorStaying fully invested

The ChaserChasing last years’ hero

A difference of

$1,313,833

Source: MLC.As at 31 Dec 2010. All Ordinaries Accumulation Index, MSCI World Gross Accumulation Index ($A), Commonwealth Bank Bond Accumulation Index, S&P/ASX200 Property Accumulation Index (Listed Property Trust Accumulation Index prior to July 2000),UBS Warburg Australia Bank Bill Index (RBA 13 Week Treasury April 1987). Income and dividends reinvested.Balanced portfolio: Australian Shares: 37%, Global Shares: 24%, Australian Bonds: 31%, Listed Property Securities: 8%, Cash: 0%.

26

Determining your risk profile

• Perception of risk varies due to:

• Cultural differences

• Past experience

• Personalities

• Individual wealth position

• Time

• Your attitude to risk will determine which strategy will suit your needs

Risk can be managed, but never eliminated.

27

Cash a safe haven?

Over longer periods Australian shares have produced annual returns markedly superior to cash:

Period to October 2011 Australian shares Cash return

10 years 7.3% 5.3%

15 years 8.4% 5.3%

20 years 9.1% 5.6%

Source – Morningstar (referenced ‘The trouble with cash’ - Vanguard Investments, 15 December 2011

28

Term deposits versus sharesIncom

e

Source: RBA, IRESS. Data as at 30 September 2014.Past performance is no indication of future performance.

Diversification can create more consistent returns

*Actual indices returns (Annualised returns are calculated on a rolling monthly basis from 30 September 1995 to 30 September 2014. This table is based on the standard indices used by investment professionals to measure performance of asset classes. Percentage return over rolling 1 year. UBS Australia Bank Bill Index, UBS Australian Composite Bond Index, S&P / ASX 200 - A-REIT Accumulation Index (ASX Property Trusts Accumulation Index pre April 2000), S&P/ASX 300 Accumulation Index (ASX All Ordinaries Accumulation Index pre April 2000), MSCI World Net Index (A$). All dividends reinvested excluding fees and charges.

#Non actual returns. The Diversified Portfolio is a portfolio constructed from the returns of these market indices with the asset allocation of: 35% in Australian shares, 25% in international shares, 25% in fixed interest, 10% in Australian property securities, 5% in cash. The Diversified does not represent any Colonial First State portfolio nor the actual returns that this portfolio achieved because it does not exist. The constructed Diversified Portfolio illustrates how such a portfolio may have performed based on the new market indices. Each Colonial First State portfolio has a different asset allocation from the illustrated diversified portfolio used above. Past performance is not an indicator of future performance. The above actual index returns and non actual returns for the Diversified portfolio also cannot be directly compared to an individual Colonial First State fund’s return for many reasons such as they do not include allowances for fees or taxation and do not reflect the asset allocation or stocks held now or over time. The index returns cannot be directly compared to an individual Colonial First State fund’s return for many reasons such as they do not include allowances for fees or taxation and do not reflect the asset allocation or stocks held now or over time.

30

Remember - equities are investments in real companies

How was your day?

You were woken up by a Sony clock radio (Japan). You made

yourself a Lipton tea (UK) and ate a bowl of Kellogg’s Corn Flakes

(US). Maybe spooned on some Nestle yoghurt (Switzerland).

Even the Vegemite on your toast was made by an American company!

You got in your Nissan car (Japan) to go to work and switch on your

Hewlett Packard computer (US).

Later that day you called some friends on your Nokia phone (Finland)

before finally putting your feet up with a well-deserved Heineken

(Netherlands).

31

Dollar cost averaging

• Dollar cost averaging is a strategy of investing a fixed amount at regular intervals.

• It lowers the risk of investing a large amount into a single investment at the wrong time.

• The benefit is that the timing risk is reduced and as a result the cost is averaged out over time.

32

Dollar cost Dan

InvestorPrice paid for

unitsTotal units

allocatedValue of units

at month 10Profits made on

investment

Dan$0.89 - $1.02 106,238 $104,113 $4,113

Natalie $1.02 98,039 $96,078 -$3,922

Natalie entersDan starts

Source: One Path Investment Fundamentals 11/2010

33

• Only 22% of Australians have life insurance

— With 37% of income going to service mortgages this can create significant problems*

• One in three Australians are expected to be off work for more than three months during their working life due to illness or injury**

*AXA/DEXXR Under-insurance report, 2009.

**Institute of Actuaries, Interim Report of the Disability Committee, 2000

Some inconvenient facts – do you have enough?

4. Insurance protection

34

• One in two Australians will suffer a medical trauma event during their working lives (and 24% of cases are in the 20 - 49 age group)*

• Half of all men and a third of women will be diagnosed with cancer before the age of 85**

*ABS Yearbook 2002 Health – Special Article Chronic Diseases

**Cancer Council: (www.cancer.org.au), Cancer in Australia: an overview, 2008 Australian Institute of Health and Welfare (published December 2008)

Some inconvenient facts

Insurance protection

35

Fact 4,400 parents with dependent children die each year in

Australia

Issues Chronic underinsurance - 60% of parents with dependent children don’t have adequate finances to look after loved ones for more than year

Opportunities 4-way protection:

1. Life insurance

2. Disability insurance

3. Trauma insurance

4. Income protection

Source: AMP:NATSEM Income and Wealth Report No 4 March 2003

Put a safety net under your family

Insurance protection

36

Insurance protection - case study 1

Blair is 38 and a self-employed plumber• He and his wife had their first baby a couple of months ago

• A financial adviser shows how little they’d have to pay for some peace of mind in case something happens to Blair

• Taking the advice, Blair obtains:

– Trauma cover, to cover medical expenses and help with recovery, plus

– Income protection, to provide a monthly benefit to pay living expenses including the mortgage (after a 1 month waiting period)

– Both policies will continue until he reaches age 65

37


• Three years later Blair is diagnosed with cancer

• Fortunately:

– his trauma policy payout helps him cover the costs of managing his illness as well as paying a lump sum off their mortgage and leaving money spare

– the income protection policy provides a monthly income while Blair is unable to work to undergo surgery and chemo

• This supports the family financially so Blair can concentrate on getting better

38


Alex aged 36 years was self-employed and sole source of income

• He and his wife Helen (aged 32) had three children under age 5 years when Alex was diagnosed with a brain tumour

• They had a $250,000 mortgage

• Unfortunately the couple’s happy-go-lucky attitude meant they never considered terminal illness would happen to them so they had no insurance

• Alex had $30,000 in superannuation but no death or disability insurance through super because he was self-employed and not contributing to super

39


• Alex could take the $30,000 out of super but nine months later when he passed away, the family had no money to live on

• Both sets of parents helped Helen financially while she lived on a single parent pension and cared for her young children

• She could not afford mortgage repayments alone, so had to decide:

– to sell the home and move in with her parents, or

– to continue to live in the home and depend on parents’ assistance

• Helen returned to work while the grandparents babysat

40


• If Alex and Helen had addressed their personal situation with a financial adviser they could have provided finance and peace of mind for themselves and their young family

• They would have also relieved their parents of this burden on their own finances, lifestyle and retirement

41

0 9010 20 30 40 50 60 70 80

Working life

71 yrs1968

Education Working life63 yrs

1928

Source: ABS 2003a, 3302.0, 3102.0, 3222.0; Australia’s Health 2004 (AIHW)

Education Working life81 yrs You

Retirement

Education Retirement

Retirement

5. Superannuation

Will you have enough to retire on?

42

Plan on living longer

Sources: Australian Bureau of Statistics population projections; 30 June 2009 and OnePath Mortality tables 2009.

How many Australians live to 100 years of age?

For a 60 year old couple there is a 50% chance one of them will live past 90 years old.

43

Superannuation

• Superannuation is not a tax!

• Make sure you are using this great investment vehicle appropriately

• Active management of superannuation at any age can yield results – the younger you start, the better

44

Thinking ahead…

Taking stock means asking some hard questions

Timing When do I want to retire?

Amount How much will I need?

Will my employer super be enough?

Unknowns What about my health?

What if I get an early redundancy?

Do I want to stop working?

Superannuation

How much is enough?

• Everyone is different and how much you need to live comfortably in retirement will depend on a range of factors including whether you are married or single, if you have dependants, how you plan to spend your time, your hobbies and interests just to name a few.

• The Association of Superannuation Funds of Australia (ASFA) has put together a guide which shows how much you will need for a comfortable standard of living and the types of things you may need to spend your money on. They have estimated that to live comfortably:

– retired singles will need $40,034 per year for a male, and $42,201 per year for female.

– couples will need $57,847 per year.

46

How much is enough?

Retirement Planner MoneySmart: https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/retirement-planner

Joe is 30 years old, single and earns $50,000 per annum

• He wants to know how much he needs to save to retire at age 65 with $40,000 per annum after tax income.

• We Assume Joe has $100,000 in super currently.

• To have $40,177 income per annum at retirement Joe will need to salary sacrifice $198 per fortnight to super until age 65 to reach this goal.

We assume 0.50% management costs invested in a balanced portfolio (returns at 7.30%) till retirement , then conservative portfolio in retirement (returns at 5.5%), insurance costs of $100 per annum. CPI 2.50, rise in standard of living 1.00% per annum. We also assume at retirement you have a lump sum expenditure of $69,000 for a new car/holiday/ renovations.

47

Why is super an effective option to retire comfortably?

Super – concessionally taxed

• Low earnings tax

– max 15% in accumulation (saving) phase.

– 0% in pension phase

• No tax on withdrawals from age 60 (most funds)

Outside super – marginal tax rates

• Earnings taxed up to 49%

• Withdrawals may incur CGT, at tax rates up to 49% (50% discount may apply after 12 months)

Superannuation

48

Grow your super

• Start early

• Consolidate

• Invest for growth

• Government co-contribution

• Salary packaging

• Remove fixed interest

Superannuation

49

Superannuation - The case for consolidation

• Colin has one super fund with a balance of $10,000.

• His partner Jenny has 5 super funds, each with $2,000.

• They both pay an annual administration fee of $5 per month for each fund.

• Over 30 years, Colin's super balance grows to $93,830 compared to Jenny's balance of just $66,642.

Source: BT, 2011. Example based on annual returns of 8%p.a. reinvested. No allowances have been made for inflation or taxation. This assumes that the only fees paid by the member are administration fees of $60p.a. and doesn't take into consideration any additional contributions made to any funds.

A difference of $27,188 over 30 years, simply because Colin decided to consolidate.

50

$42,919

$68,485

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

0 5 10 15 20 25

Years

Valu

e o

f in

vest

ment

($)

6% net return

8% net return $25,566

Assumptions: Calculations based on $10,000 invested in two growth portfolios, one with a return of 6% and the other with a return of 8%, compounded over 25 years. No allowance for tax.

Superannuation

A difference of

Invest for growth

51

Salary packaging – why do it?

Build up your super from pre-tax money

• Superannuation is a tax-effective investment structure. Money invested into superannuation through salary packaging is taxed at only 15% for many Australians which is less than most marginal tax rates.

• Superannuation does not attract Fringe Benefits Tax.

• It is important to remember that you can generally only access your money in super when you have reached your preservation age and have retired. The preservation age is between 55 and 60 depending on your date of birth. Investments into super should be made with this time frame in mind.

* Consult a financial adviser or accountant for your individual tax position.

Superannuation cont

52

Taxable income

Tax at your marginal tax rate

Gross income

Bank account

Salary packaging – how is it done?

Salary packaging

pre-tax supercontribution

Superannuation

53

“Risk comes from not knowing what you’re doing.”

Warren Buffet

Need some help?

54

The importance of having a plan – be prepared

Have a plan – your financial strategy

• Cash reserves for emergencies

• Include a plan to provide income in retirement – even if it is 20 or 30 years away!

• Invest for growth – money for later

• Use tax-effective strategies

• Understand risk

• Plan for the unexpected

55

Anyone with a need for financial advice can benefit from it

$0

$100

$200

$300

$400

$500

$600

$700

A youn

g fa

mily

build

ing w

ealth

A wea

lthier

fam

ily

build

ing w

ealth

A low in

com

e pla

n

Pre re

tirem

ent p

lan

Pre re

tirem

ent

inher

itanc

e

A retir

ed n

urse

A fam

ily in

nee

dA p

ost

retir

emen

t

inher

itanc

e

Value of advice Cost of advice

Pre

sen

t va

lue

($

00

0’s

)

Source: Financial Planning Association 2008

56

Value of advice – intangible benefits

0%

10%

20%

30%

40%

50%

60%

70%

Peace of mind Greater controlof finances

The prospect ofa more comfortable

retirement

Avoiding badinvestments

Following abudget

The ability tosave

Source: Galaxy Research 2009

66%

63% 62%

54%

47% 46%

57

Start getting more from your 30s and 40s today

• You are going to live a long and varied life – you need to plan ahead

• Keep your debts under control, start a regular savings plan

• Be patient and disciplined, take a long term view

• Make sure you have enough insurance

• Make the most of superannuation

• Safeguard your retirement, start thinking about it now

Remember you don’t have to be wealthy to see a financial adviser.

Seeking advice is about making the most of what you’ve got.

58

Do something now

• Take responsibility for yourself

• Set your goals

• Take action today!

You can achieve financial security

Thank you for attending

Live well: build wealth and bury debt is an Authorised Representative of RI Advice Group Pty Ltd.

Documents

Transcript of Live well: build wealth and bury debt is an Authorised Representative of RI Advice Group Pty Ltd.