Taxation

Negative Gearing

Negative Gearing is the process whereby you deliberately create a negative income by borrowing an amount of money to invest in an asset which provides an income less than the amount of interest paid on the borrowings. In other words you aim to lose money!

This loss is then used to lower your other taxable income so that you pay less tax than you might otherwise.

It is wise only if:

1. The asset you have invested in has a long term capital appreciation. Hopefully this appreciation will, in the long run, outweigh the losses incurred.
2. You have enough cash flow to comfortably carry the losses incurred.
3. You are sure the losses will be deductible

Should I do it?
Answer yes to all of these questions and then contact us for confirmation:

· My personal income is high, say $45,000 plus Yes/no
· I have investment income Yes/no
· I actually save money each pay period and have savings Yes/no
· I generally pay tax each year rather than receive a refund Yes/no
· I have no significant financial obligations, home loan etc. Yes/no
· My spouse / partner also has high taxable income Yes/no

If you had a no answer, contact us with the details and we may be able to assist you. Each case is different and should be assessed on its merits.

Personal Financial Planning

Personal financial planning begins, by definition, with a plan. We cannot hope to provide any advice to clients without a very detailed knowledge of personal circumstances. After all, it would be pointless of us to give advice on, say, negative gearing if you were scared of borrowing money to invest; or to advise on estate planning if you had a second family. The complications are endless.

So, the process generally is as follows:
You tell us where you are now. That means everything. Because there is so much information to gather we use a checklist and the process can take several attempts because often you won’t have the information at your fingertips.

You tell us where you want to be. That is, your goals. It might be “to retire at 45”, or “to cash in my super and go on the aged pension”, or “to move the kids out, buy a smaller house by the beach, live on my income from making model ships”.

We gather all of this information, check the factual things like super fund balances etc. and then try and provide a plan which helps you achieve your goals. It’s a lifetime road map, helping you break your long term goals into bite size chunks.

This plan will provide some options available for you to achieve your goals, providing more than one way to reach your destination. So for example, you may be able to cash in your super and retire but it may be more financially rewarding, given current taxation laws, to adopt an alternative. If we have full knowledge of your ultimate goals then we can suggest this alternative knowing that it will also get you there.

After your review and approval, we help implement the plan, ensuring all of the steps are activated in the right order. It’s no good for example, cancelling one life insurance policy before the replacement is in place.

Once the plan is up and running, we help you adhere to it, given that circumstances change. Life is a constantly changing event and your plan must be regularly fine tuned to reflect those changes. This is the part where we become your partners; we work together to ensure the final goal is not forgotten and that you can still achieve it regardless of what happens along the way.

If you would like a plan created, simply email a request for a checklist. We will send it out to you and contact you soon after to commence the full planning exercise.

Risk

Risk is a much abused word. People talk about risk and investment in the one sentence and often don’t understand the relationship.

Generally they mean “the investment is risky” meaning “we could lose our money”. They forget other sorts of risk like:

“Inflation could eat into our savings”

“Taxation could take a percentage”

“Social security entitlements could be lost”

Or the big one these days, with people living longer than their parents:

“We could run out of money”

Part of a financial plan is to assess peoples’ tolerance of the various sorts of risk and to temper planning decisions with that assessment.

Make your own assessment. Complete this checklist and use its results as a guide to your investment decisions. Remember this is a guide only and should not be used as a definitive answer. Moreover, you should regularly update your assessment because circumstances and attitudes change.

If you would like help with your profile, simply contact our financial planning team.

Retirement

The question most frequently asked of financial planners is:
“how much will I need to retire on?”

There is no one answer and the result usually depends on the persons individual circumstances including how much does he/she earn, how old is he/she now; how long does he/she expect to live (any hereditary diseases in the family); what are his/her needs financially; what does he/she live on now; etc. etc.

Everyone is different!! Not surprisingly, most people are disappointed at the result too!!

However, it is still a good question and one which most people should try and gauge as best they can, if only to answer the question:
“when can I retire?”

Answer the following checklist.
Have you planned for retirement? Yes/No
Do you know how much it will cost you to live in retirement Yes/No
Do you have an income source to fund this cost? Yes/No
Do you know what you will do once you stop work? Yes/No
Do you know where you will live after retirement? Yes/No

If you answered No to any of these questions you may need to talk to our financial planners. They will ask you a lot more before they can answer your “when can I retire” question, and put you on the right track.

Wills

Too many people go through life, and then die, without a will. The risks are huge, particularly when you have devoted energy accumulating wealth, and wish to leave that wealth in a particular manner or to a particular person.

Consider the risks of leaving your estate to the wrong people, or having your will contested, or of leaving assets to people who, because of their circumstances and often through no fault of their own, may lose some, or all, of the bequest.

Consider the risks of not looking after dependent children.

Do I need a will?

If you can answer yes to any one of these questions, the answer is yes, you need a will:
1. Do you have any dependants?
2. Do you have any assets, investments, a car, home etc.?
3. Do you have any liabilities, Debts etc.?
4. Do you want certain people to have certain things upon your death?
5. Do you particularly want to be buried or cremated?
If you answered “yes” to any of the above, contact us for further information.

We cannot legally advise you on the content of a will but we can direct you to a knowledgeable lawyer, or if we feel the need is simple, tell you where you can buy a will kit.

Succession Planning

Many small family businesses have no succession plan in place. It is most common in farming families but by no means restricted to them.
Senior family members often maintain control of the business for the term of their working lives without giving much thought to, or are unable to resolve themselves, who should or could take over both control and ownership.

A 1997 study showed that whilst 70% of owners regarded succession and retirement planning as important, only 12.3% reported having a documented plan.
62% of owners indicated that their succession plans did not cover unforseen events such as accidents and sudden death.
It is a serious problem if left unchecked and often results in the break-up of the business and the family.

There is an easier way.
If you are part of such a family, complete the following checklist and assess your degree of difficulty.

Have you planned a time for your retirement? Yes/No
Have you identified someone to take over the business? Yes/No
If so, are you training them? Yes/No
If not, how will you retire?
How will your successor pay you for the business?
If you die prematurely, what will happen to the business?

If you answered No, or were unable to answer any question, you may need to talk to our financial planners.

We can assist you with the transition, acting as facilitator in the process.

Investment

Share Purchases / Sales

As Authorised Representatives of Lonsdale Financial Group Limited, Shugg Consulting FP Pty Ltd are licensed share brokers. We are able to accept share buy and sell orders and activate them on your behalf provided we give you no advice whatsoever on the transaction.

To buy or sell shares, simply call our office for advice on the process, or email your instructions to us. We will confirm by phone before placing an order.

If selling, funds will be available for collection upon settlement which could be seven days. Shugg Consulting FP Pty Ltd will advise you upon receipt of contract.
If buying, you acknowledge that you have the funds to complete settlement now.

If Share Portfolios are your thing we can construct, and maintain, portfolios tailored to your needs.
Our Model portfolios are designed by the analysts at Lonsec Limited, using high performance shares and matching them to complement each other in the total portfolio. The models are reviewed regularly by Lonsec Limited to ensure that shares are still performing and that they are still suitable for the portfolio.

Managed Funds / Shares RESEARCH

As financial advisors Shugg Consulting FP Pty Ltd often recommend and deal with managed funds and listed shares.
Part of our service entails providing our clients with advice on their portfolio of investments. To do this we obviously require up to date and reliable information.

Our licensee, Lonsdale Financial Group Ltd provides such research, which we supplement with information from other research providers, and we are able to provide updates to our clients.

If you wish to use this service feel free to contact us to arrange a level of service.
At the bottom end you may just like to access research and limited-advice transaction services.
At the top end you may wish to subscribe to our fully fledged Portfolio Review Service (“PRS”) whereby we provide you with quarterly (or some other period) reviews of your total portfolio including research, advice, comments, and adviser access.

And the ultimate in service is where we handle all of the paperwork. Combined with PRS this saves you the worry of handling the mountain of paper that seems to come with investment. With both PRS and internet access on Wrap, you have complete access to portfolio values at all times AND adviser access.

Superannuation

Most people these days have some form of superannuation. Unfortunately a lot of people also have either the wrong fund for them or multiple funds as they move from job to job.

Lost your Super?
We can help you locate it. With a little bit of information we can find your super and help you transfer it to a fund which is more suited to your requirements.
Email admin@shugg.com with a request to find lost super and we will contact you to gather the relevant information.

Which fund is suitable for me?
Not all super funds are the same. There are now a multitude of features and investment alternatives and there is one to suit you.
Email admin@shugg.com with a request to find suitable superannuation and we will contact you. We will need to collect some personal details and prepare a basic financial plan. An adviser will arrange to meet with you to process this.

My boss has a company super fund but I have some choices to make. Can you help me?
Sure we can. As above, email admin@shugg.com with a request for information and an adviser will contact you.

My company runs a fund for employees. How does it compare with other funds?
Email to admin@shugg.com to request a fund comparison. An adviser will contact you.

Personal Insurance

“Most people never fail to insure their home or their car but neglect to insure their most valuable asset, themselves”.

During the course of their lifetime, an avergae of one in three men is likely to develop cancer of some sort.
Every day in Australia around 80 people die prematurely from heart disease.
If you are 25 now, earning $30,000 pa. you will earn $3.6Mill (indexed) before you retire at 65. Imagine if you were too ill to work.
The chances of women developing breast cancer in Australia are 1 in 11.
How much cover should I have?

Complete the following checklist to guide you in this decision for death, trauma, and or TPD cover, and income protection cover.
Do you have any debt (eg mortgage on home)? Yes/ No
Have you provision to educate your children? Yes/No
Is there any family history of terminal illness? Yes/No
Are you protected against loss of income? Yes/No

Did you answer No to any of these? If so, you may need to discuss these issues with our financial planners.
If you want to know more, contact us by email for an indicative quote.

On-Line Portfolio Management

You might like us to manage your investments but keep an eye on their progress as well.

You can. WRAP!

We are able to set up your portfolio so that we can watch progress and move investments, with your approval, on an on-line, web based, site. Fully secure. Easy to operate.

You have the peace of mind associated with professional management of your portfolio;
We have the tools with which to efficiently manage your investments.
Available for managed funds, direct shares, and superannuation.
If you would like information, please contact our financial planning team.