Savings and wealth creation strategies
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Important information
This presentation has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision (with or without the assistance of an adviser), you need to consider whether this information is appropriate to your needs, objectives and circumstances.
Today’s agenda
The big picture - where are you now? Where do you want to be in the future? Seven simple strategies Quick and easy savings tips Cutting fees on your super Your future - your choices Getting help
The big picture - where are you now?
The big picture - where are you now?
Australian population breakdown:
2001 Proportion aged (%) Under 15 15 – 64 65 and over Baby boomers age cohort1 Median Age (years) Total Population (million) 20.3 67.3 12.4 29.0 35.5 19.3 2011 18.3 67.7 14.0 26.3 38.3 21.0 2031 16.5 62.2 21.3 18.7 42.2 23.7 2051 15.6 60.2 24.2 4.5 44.1 24.9
1. Australian residents born between 1946 and 1965.
Table source: Australian Bureau of Statistics (Cat. No. 3201 and 3222).
Longer life expectancy Trend towards earlier retirement Higher expectations of retirement
The big picture - where are you now?
Wealth per head of Australians in 2001
Age 14 – 34 35 – 54 55 – 69 70+ Population (millions) 5.867 5.671 2.555 1.544 Wealth per head $49,000 $212,000 $295,000 $220,000
Source: Roy Morgan Research, 2001
Baby boomers - wealthiest segment but still have more years of saving opportunity ahead Low savings of Australians in the 14 to 34 age bracket, including the Generation X’ers
Where do you want to be in the future?
Where do you want to be in the future?
1. Work out your income needs • create a budget of income and expenses - it may give you information to
take control of your money, may show you ways to achieve this, and could assist your financial planner to give helpful advice
2. Project how much you need to accumulate to produce the required
annual income every year from retirement until you die 3. Set realistic targets 4. Establish savings goals 5. Revisit and review your goals regularly
Seven simple strategies
Seven simple strategies
1. Invest in super
• there are tax breaks on contributions and investment earnings • you may become entitled to a rebate on your personal income tax • interest on money borrowed to fund an investment is generally tax
deductible
2. Contribute super for a spouse
3. Borrow to invest and claim tax deductions on the interest expense
4. Invest in shares that pay franked dividends
• you can reduce tax payable on dividends, and franking credits can be
used to reduce tax payable on other income
Seven simple strategies
5. Pay off the family home
• you do not have to pay capital gains tax if there are more than
•
12 months between the purchase and sale of your home every dollar invested can give you a tax-free return on the sale of your home
6. Get private health insurance
• 30% tax rebate on the cost of private health insurance premiums
7. Convert super to an income stream
• potential tax benefits
Quick and easy savings tips
Quick and easy savings tips
1. Consider an automatic deduction from your pay into a dedicated savings account. You’ll be surprised at how quickly it builds up! 2. Before making a credit card purchase, make sure you’ll be able to pay it off
at the end of the month. If not, consider lay-by to avoid paying interest
3. Remember: small purchases add up. For example, if you spend $8 on lunch each workday, over 12 months this adds up to over $2,000 4. Stick to your shopping list and don’t go to the supermarket hungry!
Impulse buying wastes money
5. Start saving coins. After a few months, the money can be used for household expenses
Cutting fees on your super
Cutting fees on your super
If you’ve changed jobs over the years, there is a good chance that you have old super accounts from previous employers Multiple accounts = multiple fees Generally, consolidating your super accounts reduces the amount of fees and charges you would otherwise pay on multiple super accounts A dollar saved on fees is generally another dollar that’s invested Get your copy of the Super Consolidation Made Easy form
Your future - your choices
Your future - your choices
Making the right investment choice may improve your quality of life in retirement Growth assets such as shares and property may achieve better returns, but they can also fall in value Income assets such as cash and bonds are lower risk, but the trade-off is a lower return When choosing an investment, take into account your:
- investment goals
- timeframe for investing - tolerance to risk - financial position; and - current investment diversification
Your future - your choices
Getting help
Getting help
The new AXA Freedom website features a range of calculators that can help you better understand your financial situation: - Investor profile calculator - Budget planner - Super savings calculator
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