Continuum Financial Planners Pty Ltd

Wisdom in hindsight: a Case Study on ‘hypoH’

noreply@blogger.com (continuum fp) — Tue, 27 Mar 2012 23:00:00 +0000

How often have you said – or have you heard your senior friends say – ‘if only I had….’? In this post we are going to look at some of the decision points as we journey through life, but looking back from a time when retirement is being contemplated to consider how things may have turned out differently if more informed decisions been taken at some of those occasions.

Let’s contemplate hypothetical Harry: this imminent retiree has arrived to a time when a decision needs to be made about retirement – looking at the asset position, he finds that as a 65 year-old, his superannuation account is sadly shy of what is desirable for a comfortable retirement. The fund has less than $200,000 invested – and because of investment decisions based on his age, the asset allocation in the fund is for a defensive outcome. Harry also has a home, still subject to a mortgage at about 65% of its current market value. He is married (for a second time) and has a teenage child still in the family home.

We won’t detail all of the financial position for ‘hypoH’ but suffice it to say that there are some decisions he has reflected on that he feels he could have had a better end-position had he taken appropriate advice.

‘hypoH’ has been employed in well-paid positions for the past thirty years. He has had reasonable cash flow over the past ten years in spite of having settled a marital breakdown situation some fifteen years ago. Unfortunately, much of what should have been ‘surplus’ cash flow has been expended on lifestyle items including new cars, overseas holidays and expensive interior furnishings for the home; and so only a limited amount has been deployed to reduce the mortgage debt.

What could hypoH have done differently over the most recent few years? Since age 55, our subject could have been accessing his superannuation account in a way that would actually help him to grow the amount accumulating – yes, he could have been eating some of the cake and still have more left! Since he turned age 60, this strategy could have been even more effective. [From age 55, the withdrawals would have been subject to some taxing considerations; from age 60, no tax would have applied.]

Since 1 July 2007 hypoH could also have been making higher levels of contribution to bolster the accumulating funds: with separate caps on Concessional and Non-concessional contributions, the spent ‘surpluses’ could have put the family I a stronger position to cope with the imminent retirement.

Fortunately for hypoH his health has stood by him well over the past several years, but his failure to insure himself (and his family) has meant that they have lived those years with a higher level of risk – and anxiety – than was necessary. In the absence of a considered Estate Plan the family has not considered their need for life insurance products and hence hypoH is entering retirement phase with only a limited (and diminishing) amount of insurance protection that has been provided by his employer-sponsored superannuation scheme. Even with this, his Income Protection and his TPD covers have now reduced to Nil. His wife and young family are in financial danger if he meets an untimely demise any time soon. [And with a ‘former family’ in the background, the lack of Estate Planning may mean that there is an even greater risk for them should there be any challenge by the former family to participate in the distribution of the Estate.]

When hypoH was between 35 and 45 years of age, he might have been wise to heed the recommendation of that insurance adviser that called on him so many times and taken some properly structured insurance – and taken ‘level premium’ insurance so that it remained very affordable towards the latter years.

Whilst hypoH may have had to settle out some of the accumulate wealth on the breakdown of his first marriage, having established a habit of regular saving would have stood him in good stead – and made him aware of the benefits of ‘dollar cost averaging’ to establish a fund for the education of his second family.

All of these strategies were available to hypoH over the course of his financial journey: hypoH won’t get another go at getting his affairs in order (unless of course he wins Lotto, benefits from a significant inheritance or in some other way receives an unexpected significant capital windfall). Our readers however, can take advantage of the lessons learned through hypoH’s experiences – but the time to act is NOW!

To ensure you don’t arrive at this position, call Continuum Financial Planners on 07 3421 3456 to arrange a meeting with one of our experienced advisers; or if wanting to contact out of office hours, use our online facility to Contact Us – the first three enquirers to respond will be given a free, no obligation consultation.

Disclaimer: The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Insurance - offload the risk!

noreply@blogger.com (continuum fp) — Tue, 20 Mar 2012 23:00:00 +0000

Want to bet you don’t need it - insurance, that is? - That’s exactly what you are doing when you fail to adequately insure yourself (and your family)! You take a bet that your family that you will stay in great health for the rest of your very lengthy, healthy and safe life!

So why don’t we take adequate protection with an insurance company? Some of the reasons we hear include –

Never thought of it;
Can’t afford it/ it’s too expensive;
Not yet.

What of those explanations?

Never thought of it¹
Well, now you are at least in a position to read about it. The link below has a number of further links that provide many opportunities to broaden your understanding about the benefits of the different types of insurance protection available – and without promoting any one provider for any of them!

Australians are (almost) hopelessly under-insured: it’s almost cultural! Some ‘haven’t thought of it’ because they ‘haven’t heard of it’; some are too busy leading exciting lives they haven’t turned their minds to the matter; and some others don’t understand the implications of being under-insured – and so just don’t think about it!

If any of the following situations describe aspects of your life, you should be insured – and you should review the level of insurance you ‘carry’ – so as to be able to reassure your loved ones that their future is sound:

you have a spouse;
you have dependants (children, parents etc);
you have debt (mortgage, credit cards, personal loan, line of credit);
you are employed;
you operate a business;
you have employees who are key to your business;
you have business partners.

..and whilst the above list is not exhaustive, any one of those situations means you have people who are critical to your financial well-being and/ or who are dependant on you maintaining your financial well-being.

If you haven’t thought about insuring your life think about their position if you meet with an unexpected illness or accident, or worse if you die. Some Case Studies might heighten your awareness of the need for adequate protection: see links below².

Can’t afford it/ it’s too expensive
Sometimes excuses can be justified, but when your mind is numbed by the message the doctor has just delivered about an unexpected illness or disability, the next fear by most victims of such circumstances is what financial position will they (and their loved ones) be in as the disorder/ disability takes effect?

A recent survey (from which we published some extracted statistics)³ shows that most of the people who make this statement don’t have a correct perception of the likely cost of the insurance in any event – in most cases, their estimates of what cover would cost in their circumstance was considerably in excess of the market average premium applicable!

When the need arises and there are education costs to pay, medical costs/ ongoing care to pay, mortgage costs to pay – and limited financial resources available at the desperate time, the cost of the protection that would facilitate the servicing of all of these financial obligations (and normal day-to-day living costs) – through an appropriate insurance plan – suddenly seems as though it wouldn’t have been so high after all!

Not yet!
This is the really scary one folks! This is the response of the person who knows they need to have the cover; they know they should have the cover – but they choose to bet that they can get the timing right! GOOD LUCK!

The facts are that –

insurance protection is more easily obtained for healthy applicants with no adverse medical history (i.e., no risk exclusions or premium loadings – and unlikely to be declined cover);
illness and disease can strike with short notice – and once that happens, the whole spectre of insurability can change; and
good habits formed early mean peace of mind for you and your loved ones over the longer term.

Don’t bet against the odds: Ensure that you are adequately insured.

¹ http://www.continuumfp.com.au/services/risk-insurance-services/;
² http://www.continuumfp.blogspot.com.au/search/label/Insurance (Who Do You Love? Case Study); http://www.continuumfp.com.au/ashleys-story/
³ http://www.continuumfp.blogspot.com.au/2011/08/insurance-numbers-crunch.html#links

Disclaimer: The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Savings or Investment (which do you do?)

noreply@blogger.com (continuum fp) — Wed, 14 Mar 2012 03:33:00 +0000

With all of the turmoil reported in the financial media over the past couple of years, the focus has been concentrated on the assets in which people invest – and diverted from the investment process they are engaged in. To a large extent the activities of (high frequency) traders and speculators are the cause of this volatility and the media is not reporting the scenario as it applies to savers and investors.

The very definitions¹ of these two words should tell us something as to how the money held for each purpose should be ‘held’. In short, savings should be held in very liquid assets with a high level of capital certainty and with little risk in relation to what will by corollary, be the low interest/ income earned. (We will return to this theme a little later.)

Investments on the other hand ‘use’ the money (it is put to work) – and so a more complex process is required to ensure that all relevant matters are considered. Professional financial planners² work with each client to establish the factors that apply to them – and how they apply to the particular client under consideration.

One of the features that ‘savers’ and ‘investors’ have in common is that their intended timeframes are generally medium to long-term. Sure, savers may be confronted with an unexpected short-term ‘call’ on the fund but generally they hope that will not be the case. The risk of that is protected by the fact that the fund is held in very liquid assets, usually cash at bank. Investors will have their assets diversified according to their identified needs – but usually targeting medium (3 to 7 years) to long-term (more than 7 years).

Some of the key questions a prospective investment client will need to be able to answer for their financial planner include –

Current holdings of assets in various classes ³;
What debts have been incurred to acquire the above assets;
Are all of the assets (and the debt associated with them) for income-generating purposes;
What cash flow position are you in (what sources/ level of revenue; and what expenses – including personal/ lifestyle, debt servicing and any work-related): is there a surplus to work with;
With indicative timeframes specified, what acquisitions/ wealth accumulation is required (allowing for major costs along the way such as, children’s education; holidays; home renovations/ replacement; cars etc);
What is your sensitivity to investment market risks such as – income/ valuation volatility; particular asset classes such as – shares/ property/ commodities; economic and market cycles; and
To what extent are people who are financial dependants to be considered (children; parents; business partners).

For this discussion, investment is a process as well as an activity. [Contrast trading or speculating with investment-type assets, which can be bought and sold – directly or based on derivative products, at short notice and even repetitively. Such activity is better considered as a business (active financial transacting) rather than investment (more passive financial transacting).]

If you are a saver looking to become an investor over time; or if you are an investor seeking to ensure that you are ‘on the right track’ – call our office (on 3421 3456); or use the online Contact Us facility to arrange an obligation-free, no cost first interview with one of our experienced financial planners.

¹ Definitions:

Savings: (noun) a fund of money accumulated (and put aside as a reserve)
Investments: (noun) money used to make more money – assets purchased to gain income; to increase capital, or both.

² At Continuum Financial Planners we have a number of experienced advisers available to work through these processes with you. Go to http://www.continuumfp.com.au/about-continuum/meet-the-team/ and select an adviser to contact for your needs.

³ Refer our article on the risk characteristics of the more common asset classes – at http://www.continuumfp.com.au/avoid-over-diversifying-your-investment-portfolio/; and what should be done with them – at http://www.continuumfp.com.au/risk-and-reward/

Disclaimer: The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

noreply@blogger.com (continuum fp) — Thu, 29 Dec 2011 23:00:00 +0000

Private Health Insurance; Comprehensive Motor Vehicle Insurance; Compulsory Third Party Insurance; Travel Insurance; Public Liability Insurance; you’ve got the idea…we usually insure our ‘things’: why should we take it for granted that our family’s greatest asset – ourselves and our ability to bring home an income (or to perform the invaluable household tasks), will not create distress and concern if they are lost, or even impaired? Insurance is available for most personal risk events: life insurance policies can be arranged to cover situations such as death, permanent disablement, critical illness and temporary long-term illness.

If you become ill or suffer an accident that takes you away from earning your usual income at the same rate as you currently enjoy, could you maintain your current lifestyle and continue to meet your ongoing commitments for the term of your disability?

If you or your ‘significant other’ suffers an accident or illness that is permanently disabling, could you sustain your current lifestyle and continue to meet your ongoing commitments for the term of your disability?

If you or your ‘significant other’ were to unexpectedly die earlier than at ‘normal life expectancy’, would the survivor and any financial dependants (children, aged parents etc) be able to fund an acceptable lifestyle and realise their potential?

Some serious considerations:

The event happens today: note the actions that will need to be taken

Accommodation/ care (in the event of accident or serious illness)
Transport
Food
Emotional support
Education
Debts to ‘service’
Health care
Funeral?

Financially what assets are available:

How liquid are they?
How quickly can they be accessed?
Will they realise reasonable value?
Whose name are they held in? (Can they be disposed of readily?)

Who needs to be considered:

Spouse/ ‘significant other’
Children
Aged parents
Business partners?

Having read the above, provide Yes/ No answers to the following questions:-

did you answer No to any of the three ‘If’ questions above?
did you have any concerns sparked by the ‘serious considerations’ tabulated above?

do you have concerns as to how to rectify any shortcomings in your planning in relation to these matters?

… and if you answer Yes to any of these three questions the experienced advisers at Continuum Financial Planners are ready to conduct a review of your situation: to arrange a meeting with one of them use the Contact Us facility on our website, or call on 07 3421 3456 – we will provide a prompt response.

[This is article 6 in a series of 6 Blogs: for other articles in the series refer to the catalogue of articles showing elsewhere on this page under Risk Insurance.]

The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Personal Risk Management – are you adequately insured?

noreply@blogger.com (continuum fp) — Fri, 25 Nov 2011 00:00:00 +0000

[This is the first of a series of Blob posts about personal risk insurance – commonly referred to as Life Insurance (although it actually covers off a number of risks potentially experienced throughout our lifetime). The series will be posted over consecutive weeks: this is post 1 of 6 items.]

What is personal risk management?

We’ll try a reality scenario as a starter:

It is 6:00 am. You hear your spouse stir from the bed and, in the usual routine, changes into some exercise gear and quietly heads out the door. In this case it is the main family income earner who has gone out. At age 49, this morning exercise routine was regular and helped keep fit for the rigours of the day’s activity at a professional office.

It is now 7:00 am and you notice that your spouse hasn’t returned. When the phone rings at 7:30 am to advise you that your spouse has been taken by Ambulance to Hospital and is being admitted to Intensive Care after suffering a major stroke, your mind clouds and you look quite concerned as you try to understand what you have just heard, process it – and then relate it to your two children (who you had been preparing to get away to school for the day).

After the concern for the well-being of your spouse has settled, early thoughts are going to be about your financial position;

The children have a few years of school left to pay for;
The house has a mortgage – mainly because of investments made;
Your spouse is the primary income earner;
Will modifications be required at home (for any continuing disability); and
How will the ongoing household – and perhaps additional medical - costs be funded?

You have been working to a strategic financial plan and have accumulated reasonable assets, but they are still subject to borrowings – and the success of the plan requires ongoing servicing of the debt as well as further contributions.
The good news is that your financial planner has implemented his recommendation and you have all of the relevant insurances in place – and for the appropriate amount of cover.

Wealth management is a critical requirement for those of us who seek financial independence in preparation for eventual retirement. Financial planning is all about wealth management and protection – and the peace of mind that goes with those outcomes. There are a number of phases in the wealth management process – taking stock of what financial resources are available; evaluating the cashflow surplus that can contribute to further accumulation; investing wisely according to our timeframe, goals and investor risk aversion profile – and having a back-up position for the possibility that any or all of this ‘could go wrong’.

A well-constructed financial plan comprises two critical elements – wealth creation and wealth preservation (wealth protection). Wealth creation is the accumulation of financial assets (wealth) and is premised on a range of assumptions and factors: including that you will have continued good health (ability to continue to earn and generate the surplus cashflow for investment) and anticipate living to a ‘projected’ age (giving you the investment timeframe to manage).

Wealth preservation is an important strategy for those who have financial dependants – whether family or business partners – who will find the challenges of adverse circumstances emotionally challenging, without having to deal with extreme financial difficulties. It is the process of shoring up the accumulating wealth so as to not expose your ‘nest egg’ to unpredictable, untimely, insurable circumstances.

Personal risk management is transferring the risk that your health may not prevail (and/ or that you may meet an untimely demise) to another party – an insurer. Appropriate risk insurance policies will facilitate you meeting your long-term financial and lifestyle objectives in spite of such events.

Why have personal risk insurance?
Personal risk insurance is important to relieve you and your family of the financial burdens associated with the loss of income if an event occurs such as death or permanent/temporary disablement. It provides peace of mind that you and your family are financially secure by providing an ongoing income source, debt repayment, a replacement housekeeper/nanny while your children are young, and possible funds to meet your children's future education needs.

Why should a professional assess my risk insurance needs?
Given the complex nature of risk management, professional assistance should be enlisted to ensure that the correct type and amount of insurance is established. The type and amount of risk insurance will depend upon your personal financial circumstances and objectives, lifestyle needs, number of dependants, your age and other factors particular to your own situation.

What types of insurance are available?
The types of insurance policies available include:

[Refer to our website for a description as to what each of the various types of insurance policy is meant to cover; and how each of them is useful in protecting your planning. They are linked for your convenience.]

Why participate in ongoing reviews?
As your wealth grows as a result of the implementation of your financial plan and your personal circumstances change, your need for insurance cover may decline or increase over time. Therefore, it is beneficial to periodically review your insurance cover.

Contact Us
Experienced advisers at Continuum Financial Planners can assist you determine your needs for personal risk insurance protection: please contact us for prompt attention to arranging a meeting to consider your particular situation – use the above link, or call our office on 073421 3456.

The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

From Deep Panic to Hope – lessons to learn

noreply@blogger.com (continuum fp) — Mon, 31 Oct 2011 05:44:00 +0000

Over the six weeks following early-September, the US Stock Market Dow Jones Index has risen over 19%! ‘Well done’ to those investors who stuck with their portfolio when the roller coaster ride of August/ September 2011 started – especially our clients who heeded our special advice.

The following chart shows the investment cycle of undisciplined investors: and according to survey results, these people more often end up with less than 40% of the final outcome achieved by disciplined investors working to a well-structured strategic plan appropriate to their circumstances.

The reader is invited to make their own call as to the likely outcome for investments made at various points in the cycle. However, it should be obvious to all reading this chart that when making any acquisition, less gain is to be made when you buy at ‘the highs of the market’. ‘Buying at the highs’ and ‘selling at the lows’ – which fits the emotional pattern above – is exactly contrary to the strategy that will make a portfolio grow.

Where do you think we are in this cycle now?

Whilst the above chart is more relevant to short-term decision-making, the lessons for the long-term investor should also be obvious:

Timing markets is difficult – and so buying in over a series of investment tranches (deposits) will remove some of the effect of the risk
If you agree that we are somewhere in the range from ‘deep panic’ to ‘hope’ – now will be as good a time as you are likely to encounter in the hunt for Value in the acquisition of further investment assets.

Regular followers of our Blogs and website articles (eNewsletter articles) will be aware that we have published several articles relating to these topics. Please consider a Search at http://www.continuumfp.com.au/ for articles about investing, market timing, dollar cost averaging and ‘happy investing’ to accompany this Blog.

We would appreciate your comments and will respond to any questions or concerns: follow us on Twitter; Like us on Facebook; and take the RSS feed for our Blogposts.

The information contained in this article is general in nature and does not take into account personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Investment Principles 101 (or Core Wealth Management principles)

noreply@blogger.com (continuum fp) — Wed, 19 Oct 2011 00:00:00 +0000

Call it simplistic, even call it naïve – but at the end of the day, when investors place surplus funds there are some key issues that they are looking for: security, return and liquidity. We make the case that investors looking at the current market could do well to settle their emotions and take advantage of what might be perceived as a ‘buying opportunity’ (an under-pricing of a number of asset classes), mainly influenced by traders (who have a very different set of criteria driving their buy-sell decisions).

If it is that simple for investors they should be looking at the key elements to each of those identified characteristics to determine their investment timing; and what they should invest into. (Whilst it is a critical element in constructing an investment portfolio, diversification of a portfolio is a significant topic that has been covered in articles prepared by Continuum Financial Planners in the past and can be found in the Articles library on our website, using the search function – see http://www.continuumfp.com.au/.)

Security

Whilst not an exhaustive expose on this matter, the key concept of security is to be satisfied that the capital that is being invested is going to be preserved, if not throughout the period of the investment, at least by the time the investment is to be realised. For many investors, the goal is to benefit from capital gain in the process – and a gain greater than:

The inflation experienced during the term of the investment;
The calculated risk factor in making the investment;
Any funding costs (where gearing is involved in the investment); and
The tax consequences arising from the investment (both by way of revenue and any taxable capital gain).

Return

The return that investors expect from their investments varies from each individual’s perspective – and it is not sufficient to say that we expect ‘the highest possible return’. Targeting a % return from an investment is important, but the need for a young wealth accumulator to have income will be less concentrated than that for a retiree – even if they are investing in the same asset class. (To some extent the structure under which the asset is held will create the variation required, but that is more relevant to the return to the investor, than the return ‘on the investment’.)

Bearing in mind the factors mentioned above in relation to Security, the return on an investment (aka, the Yield) is dependant on the price paid for the investment asset so that –

If a 10-year Bond is issued with a 5% p.a. quarterly coupon at an issue price of $100, the yield at date of issue can be said to be 5% (ignoring the quarterly cashflow effect that actually raises that rate of return marginally);
Assuming that some time after the issue, other investors develop the view that interest rates are going to rise - say by 1% - then they would only be prepared to buy that Bond from an original investor for around $99; and vice versa
If the anticipation was that the interest rates were likely to fall, the new investor would be prepared to pay the holder of one of these Bonds around $101.

In its simplest analogy, the price investors are prepared to pay for an asset is determined by their expectations regarding a return on their investment. Whilst a Bond as described above might be a gilt-edged issuance (with minimal risk – usually referred to as ‘risk-free’), similar principles apply to all investment assets, with the main variable being the requirement for a higher return to compensate for the fact that the asset may not provide a consistent return; and/ or carries a risk of capital loss.

As we have stated on many previous occasions, sentiment is a significant driver of investment decisions: people ‘like’ a particular type of company; or they ‘like’ property; they sometimes ‘fear’ that a recession is coming; they may ‘be concerned’ that they are going to ‘miss the boat’ on the ‘rising tide’; or they might ‘be concerned’ for the security of their jobs/ businesses – all of these are (some of) the emotions that influence what investors are prepared to invest into; and when they want to invest (or dis-invest).

Liquidity

This characteristic of any investment asset is important to most investors because at the end of the day, money is the exchange mechanism we use to take the value from one prioritized goal to another: if at present the need for funds to meet expenses are comfortably able to be met from current income, there is no need to divert investment assets for that purpose. There may arise a position where either cash is required for an expense (recurrent or capital), or that an investment asset that is judged as being more suitable to meet strategic objectives has been identified – in which circumstances, the investment assets held need to be ‘converted’. In these latter circumstances, it is important to the investor that there is an ability to liquidate the asset held, in favour of the higher prioritized purpose.

A simple set of examples follows:

Cash in a ‘bank-style’ savings account is immediately liquid (and in any amount up to the account balance, as required);
Direct Shares (equities) in a Listed Corporation are usually saleable and converted to cash (liquidity) within a few days – usually referred to as T+3 (and can be sold down – with some ‘small parcel’ constraints – in amounts required to satisfy the need);
Direct Property will usually need to progress through a sales program that might result, fairly typically in Queensland at least, in a contract with a 30-day settlement period – but subject to ‘inspections’, finance availability for the purchaser and sometimes, the sale by the purchaser of other property: and with no ability to control the proportion of the investment to be sold/ liquidated).

Buying Opportunity

We have referred above to a number of articles that appear in the Article Library on our website: a number of those articles also refer to an investment strategy known as ‘dollar-cost-averaging’. If after reading articles such as we have led with above, investors sought an opportunity to take the contrarian approach and re-enter the market while it is priced at current levels, they might be well advised to consider making the move over a pre-determined period of time with a number of tranches of similar value.

If you are interested in taking advice in relation to your investment goals and determining whether now is an appropriate time in your situation to take advantage of such a buying opportunity, please contact us, Continuum Financial planners to arrange an obligation-free meeting with one of our experienced wealth management advisers. [To assist in your decision in this regard you might also look at Who We Are, our Client Value Proposition and our Fee for Service statements.]

The information contained in this article is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Strategic wealth management

noreply@blogger.com (continuum fp) — Thu, 06 Oct 2011 22:55:00 +0000

We have most heard the expression that ‘he who makes no mistakes, makes nothing at all’; and another, ‘if you fail to plan, you plan to fail’; and again, the reminder that you rarely set out on a motor journey without having a roadmap (even if in your mind) as to how to get there. You know where this is going so let’s not beat about the bush: having a plan, based on individual factors and with a clear strategy; and implemented/ actioned without waver will always give a better outcome than stumbling along from one hurdle to the next.

The simplest of all investment strategies was taught to us as school-aged children: open the school bank account and deposit a regular amount on every school banking day – and how great was the pleasure when at the end of the year, the accumulation of the deposits made and the interest compounded was regarded quite correctly as something that we would not have had, if it weren’t for the undying commitment to that process.

Most strategic investment planning is based on long-term outlooks (i.e., more than 5 years) and in many cases the plan takes us unto terms in excess of 20 years (embracing a latter period in retirement).

Even a simple ‘regular savings plan (with/ without ‘gearing’) is very well worth considering while you contemplate your financial independence into the future.

The following extract ‘Beating the Street’ by Peter Lynch – a former Investment Director at Fidelity in New York contains the significance of this strategy (Note – these calculations were made back in 1993, but logic suggests they will still be relevant today):

“The following calculations, strengthen the argument for investing on a schedule. If you put $1,000 in the S&P 500 index on January 31, 1940, and left it there for 52 years, you’d now have $333,793.30 in your account.

If you added $1,000 to your initial outlay every January 31 throughout those same 52 years, your $52,000 investment would now be worth $3,554,227. If you had the courage to add another $1,000 every time the dropped 10 percent or more (this happened 31 times in 52 years), your $83,000 investment would now be worth $6,295,000.

There are substantial rewards for adopting a regular income of investing and following it no matter what, and additional rewards for buying more shares when investors are scared into selling.”

If you – or any of your family, friends or colleagues – have some long-term goals about which there is any uncertainty as to the ability to attain them, Contact Us (or call Kathy on 07 3421 3456) to arrange a meeting with one of the experienced financial advisers at Continuum Financial Planners.

The information contained in this article is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Buying Opportunity … for Investors

noreply@blogger.com (Warwick) — Wed, 28 Sep 2011 21:22:00 +0000

One of the most successful investment strategies over time has proven to be working to a plan – a strategic plan – and to support that tactically with buy or sell activity to take advantage of market volatility, fear or exuberance. Wealth management, whilst strategic can also be opportunistic – but needs to be to a plan.

We have recently published an article dealing with the basic key elements in considering acquisition of an investment. That article talks about security of capital; security of the income stream flowing from an investment; and liquidity – the ability to dispose of the asset for cash at a time when higher priorities arise (or are imposed) and concludes that the market situation prevailing at the time of writing may well be presenting a buying opportunity.

Seasoned investors will be aware of a contrarian approach to the buy/ sell decision-making process and will recognise that buying when the inexperienced investor is in deep panic selling; and selling, when the inexperienced investors are buying with gusto has proven a useful strategy by which to increase the growth of their portfolio.

Market circumstances prevailing during this third quarter of 2011 are demonstrating the ‘deep panic selling’ characteristic and should be heightening the interest of investors who have a longer-term strategy to guide their activity in the marketplace.

In recent articles we have referred to a 2010 survey that showed that investors who take advice from a financial planner are generally more comfortable about their investments; sleep more comfortably at night than their colleagues who use DIY processes; and actually attain a higher average return on their investments. Continuum Financial Planners develop personalised wealth management strategies for clients who appreciate that ‘we listen, we understand and we have solutions’ when engaged by investors to develop strategic financial plans.

Early-age retirement can be hard!!

noreply@blogger.com (continuum fp) — Mon, 26 Sep 2011 23:00:00 +0000

If you are thinking about early retirement you will need to establish an income source that is an alternative to your superannuation.

If you are planning to retire before you reach the age when you can access your superannuation benefits you need these alternative investments now to develop your (early) alternate retirement nest egg.

You can only access your superannuation benefits tax-free when you are aged 60 or above (to the extent it was taxed when it went into the fund). You may still be taxed on some superannuation benefits that you receive between age 55 and 60 but there is a component that you will still be able to withdraw tax free.

These superannuation rules pose the question: When can you access your super?

Your “preservation age” generally determines when you can withdraw your super. Your preservation age depends on your date of birth - age 55 if you were born before 1 July 1960 and phased up to age 60 if you were born after 30 June 1964.

Simply put, if you want to retire before 55 you need a non-super pool to fall back upon because you cannot access your super on your retirement. If you were born before 1 July 1960 the earliest you can plan to rely on your super savings is age 55.

If you were born after 1 July 1960 the earliest you can plan to rely on your super savings is phased in over 5 years and could be up to age 60.

A person aged 46 today (i.e., born after 1 July 1964) who wants to retire or work less before they turn 60 needs a non-super retirement plan.

So what are some tax effective investment options available to you now?

If you are saving for an early retirement, consider making investments for the long-term. Even plain vanilla investments such as shares or equity-based managed funds that pay/ distribute franked dividends/ distributions are tax effective for higher income earners since you will only be paying the top-up tax up to your marginal tax rate.

Other investments options include, for example:

Tax effective investment products that have an ATO Product Ruling.
You would probably be aware of the plethora of purported “tax effective investment schemes” in the marketplace. Be careful when deciding to invest in such a scheme and carefully assess the product disclosure information and the risks. It is very risky to invest in one of these schemes unless they have an ATO Product Ruling. This sets out the ATO’s view on the tax benefits that are available for investors and provides you some protection from increases in tax and interest and penalties.

However, even if there is a product ruling, you will need to know whether the actual scheme is being carried out in accordance with the ATO ruling. If not, you are not protected from additional tax, interest or penalties.

Gearing investments
This can often be a more tax effective option than contributing to super. Borrowing to invest enables you to get deductions for interest paid on the investment loan and also means that you have more capital to invest with. Of course, you will have to ensure that the returns on your investments in the long term will exceed you interest costs.

Continuum Financial Planners has a number of experienced advisers available to consult with you to determine the most appropriate strategy for you to achieve your financial security ambitions and goals for an early retirement – or indeed any major lifestyle transition that carries a financial cost. To access an obligation-free appointment with one of our team, at no cost for the initial meeting Contact Us through the website, or call Kathy on 07 3421 3456.

The information contained in this article is general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial product.

Advice: don’t go without - but how do you measure value?

noreply@blogger.com (continuum fp) — Mon, 19 Sep 2011 23:00:00 +0000

Whilst only 2 in every 10 Australians who have invested funds seek the advice of a Financial Planner, those very wise investors have been shown to be better off than their un-advised friends: in fact the findings from a survey that was published during last year showed that those investors who worked with a financial planner were –

Readily able to discuss the strategy they were working to;
Understanding of the volatility of the markets into which their funds were invested;
Realised a higher level of wealth by the time of their retirement;
More likely to be adequately insured – and to know why they held their policies (and in the amounts for which they are written).

Congratulations! If you are amongst the 2 in every 10 Australians receiving advice – and if you aren’t: you should seek our services at your earliest convenience. Go to our website and Contact Us for an obligation-free appointment with one of our experienced advisers. The first meeting will be at no financial cost to you.

Those of you who have been clients of Continuum Financial Planners for some time will be aware that we are a ‘fee for service’ business: but how do you know that you are getting Value for the fee you pay for your wealth management advice? Let’s try a couple of measures: comparison with what others are paying; the ‘sleep at night’ test; understanding.

What others are paying –

Traditionally in the financial planning industry, advisers have charged their clients a minimum of 1% of their invested portfolio – and set a minimum portfolio size they have been prepared to work with. For a portfolio of less than $500,000 a higher percentage would have been charged, so as to equate to around that level (of $5,000 p.a. of fees). For portfolios in excess of that value, the 1% or higher would have been charged – and up until a few years ago, the level of service to be provided in return for that fee may not have actually been defined!

By comparison, our firm more usually charges a fee for service; specifies the amount of the fee; describes the level of service to be provided; charges on a ‘flat dollar’ basis regardless of the funds under management with the effect that we receive the agreed fee for delivering service regardless of market gyrations.

The ‘sleep at night’ test –

Based on what they voluntarily tell us (or confirm in surveys), Continuum Financial Planners’ clients appreciate the truth in our motto – ‘we listen, we understand, and we have solutions’ – with the consequence that you too can trust us to exercise professional judgement to ensure that your investment strategy is well-founded; and that the investment products we recommend you hold in your portfolio will serve the specifics of your circumstances. With all of this in mind you can rest easy (i.e., sleep at night) knowing that the professional team at our office is looking after your interests as best can be achieved in prevailing market circumstances.

Understanding –

Because we spend time with our clients who subscribe to one of the available service packages, they are familiar with the investment strategy setting out the road map to the achievement of specified goals; and they have research material (and access to ongoing information) about their investments available on-line and accompanying our advice documentation. You will know and understand how and why your money is invested as it is.

Because of the way we interact with our clients, we also have an understanding of their circumstances and needs – and with a substantial professional accounting background, Continuum Financial Planners advisers readily understand any personal and business financial structures.

Insurance Numbers Crunch

noreply@blogger.com (continuum fp) — Tue, 02 Aug 2011 00:18:00 +0000

The following article was published in the July 2011 issue of Asgard Wealth Solutions AXIS magazine - "While many Australians are focused on growing their wealth, there is much less attention given to protecting the wealth they have worked so hard to accumulate. Let's look at some of the numbers.
4%	the total Australian population with dependent children who have adequate levels of life insurance cover.
60%	families and dependent children who do not have enough insurance to cover household expenses for a year if the family breadwinner were unable to work(1).
81%	people think life insurance is too expensive, yet 61% over-estimate the cost(2).
31%	people insure their ability to earn an income with income protection insurance(3).. Yet 83% insure their car(4).
Insurance needs change throughout one's life. It's worth talking to your financial adviser about your current insurance and whether you are adequately covered." (1) IFSA/ TNS Protection Gap research 2005 (2) ING Australia's Attitudes Towards Life Insurance, December 2008 (3) TNS/ IFSA Investigating Income Protection Insurance in Australia July 2006 (4) AAMI Fact Sheet, Shopping for Car Insurance, September 2008

Hey Guys – give us a break! (talking about Politicians here)

noreply@blogger.com (continuum fp) — Mon, 01 Aug 2011 03:28:00 +0000

Isn’t democracy a wonderful thing? We get government of the people, by the people, for the people!? Trouble is, it isn’t always the majority view that wins! Whilst we don’t comment on a political front as a general policy, it is a fair observation I believe to ponder the effects of politicians forming alliances with marginal elements in society, just to hold on to power. It is also probably fair comment that this has emerged as common practice throughout the democratic world: in Europe, here in Aus; and now we are seeing it in the USofA.

Craving power is also not a new aspect of political life, but the consequences of these ‘square-peg, round-hole’ alliances are becoming more challenging to accept as a society when we see the legislation that is offered – or frustrated in reaching implementation. The unfortunate outcome of this is that society is left in a state of uncertainty: and with uncertainty comes anxiety; with anxiety (often times), unrest.

World markets are currently struggling with the threat of a default by the US government; and have already priced in the likely downgrade of that economies credit rating – all because the politicians can’t agree to do what every one of their home partners would have to do in a similar scenario: cut expenditure and raise additional revenue, to pay down debt!

No doubt readers might have a couple of other examples of how these alliances can bring pain and strain to economies and societies!

Investors can take heart that the global economy over the long-term will demonstrate strength; traders will in the meantime, win some and (for each one that does, others will) lose some. We have written about this on a number of occasions, but a little while back we published Who Cares about Bulls and Bears?…and that leads to other expressions on the topic.

Investors with Advisors - wealthier and wiser!

noreply@blogger.com (continuum fp) — Fri, 29 Jul 2011 05:41:00 +0000

For some time now there has been a deluge of criticism of the financial planning industry: and all of this at a time when the industry has been working hard to 'extinguish those bushfires' - and push for a higher level of formal qualifications (and ethics) for its participants, looking to achieve recognition as professionals. It is gratifying to find the results of the independently-conducted survey a year ago, has shown that clients of financial planners/ advisers are -

happier with the manageability, diversification and return on investments;
happier with the diversification aspect as they grow older; and with all aspects of their investment as their investable wealth is greater; and
understanding of the role of their advisor.

Interestingly, those who have an advisor rate their 'trust' factor in relation to financial planners much higher (at 7.5 out of 10) than respondents who are not currently receiving advice from a professional (at 4.5 out of 10).
Readers of this Blog might be interested to follow up on some of the issues and compare information on Continuum Financial Planners website to see how we might rank as advisers for them.

Tax effective year end financial transactions

noreply@blogger.com (continuum fp) — Tue, 07 Jun 2011 21:17:00 +0000

Better late than never, they say!!

Whilst most of the items that we are usually advised to attend to during the last weeks of each financial year could actually be part of our annual strategy, there is still time to 'get the house in order' before the end of the year.

Whether it is wealth creation (contributing for the co-contribution); wealth protection (getting the income protection/ salary continuance insurance in place; financial prudence (prepaying interest at a discounted fixed rate); or plain old tax effectiveness (kids education expenses; business write-offs etc) - we need to attend to these matters now.

For a detailed posting of ideas on Year End Financial Planning see our website article - and let us know some of your own strategies for managing your tax obligations.

Socially speaking

noreply@blogger.com (continuum fp) — Sun, 05 Jun 2011 23:31:00 +0000

OK people: be ready for more of the communications we produce at Continuum Financial Planners to be distributed using various social media. We will use Twitter, LinkedIn, Blogs, Facebook and our website to spread our messages.

All of our Dinosaur friends need to join the revolution: when you read this article, think of three friends who you could assist to start working with social media and get them to sign up - to our website for eNewsletters; or to our Blogs; to Twitter; to Facebook and to LinkedIn.

Become a contact with Eric, Warwick, Peter or Damien on LinkedIn; follow us on Twitter or like is on Facebook - but whatever you do, watch our spaces AND comment back to us.