ACUMEN ADVISERS JOURNAL PAGE 1 EDITION 9 April 2007 IN THIS ISSUE: Insure to be Sure Beware of Land Tax Bills Good Advice for peace of mind – Part 1 ‘Comfortable Retirement’ now $627,581 Upcoming Seminars Other reasons include: Insure to be Sure with Acumen Advisers’ Brad Turns ♦ the costs involved; ♦ the lack of understanding around the important role that insurance plays in a wealth accumulation plan; and ♦ most people have never really sat down and thought about what the implications of not having any cover really are. One of the hottest personal finance topics in At Acumen Advisers we certainly can’t help you Australia at the moment is the issue of under- plan to beat the statistics, but we can help you insurance. plan so that you are prepared in the unfortunate event that you do become a statistic. Under-insurance can be loosely defined as the difference between the insurance cover that you There is no doubt that implementing insurance have (if any), and the cover you and/or your will come at a cost. However, through careful dependants need to maintain a reasonable planning we can help to tailor a package of standard of living in the event of a claim. covers that meets your needs without breaking the bank. Did you know that in most cases According to the results of two research projects income protection premiums are tax deductible, carried by the Investment and Financial Services and life, TPD and in some cases income Association’s Protection Gap Working Group the protection can be funded through current estimate of the life underinsurance gap superannuation. This not only eases the burden for parents with dependant children is in the order on your cash flow, but it is tax effective as well. of $1.37 billion. In addition, they estimate that the income protection underinsurance gap is $265 To help you get a greater understanding of how billion. Clearly, this is no small matter. personal insurance can work for you, we have added a new seminar, ‘Insurance – More than One of the major reasons that under-insurance just a product’ to our regular series of seminars. exists is the attitude of “it will never happen to This seminar presents insurance as a concept me”. In Edition 7 of our Journal we highlighted a and a foundation for future wealth creation. It is number of statistics that countered this argument. an opportunity to understand how insurance forms a vital part of your overall financial strategy. Cont Over… Acumen Advisers Pty. Ltd. ACN 010 535 850, Greg Lucas and Brad Turns are Authorised Representatives of Apogee Financial Planning Ltd, ACN 056 426 932, an Australian Financial Services licensee with its registered address at 105-153 Miller Street North Sydney NSW 2060. Disclaimer: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information. ACUMEN ADVISERS JOURNAL PAGE 2 Cont… higher, not a lower, land tax bill. This is also the case if you own your family home through a trust Finally, to help you understand the implications of or a company, since this usually results in you not having sufficient cover, we offer one on one missing out on the usual land tax exemption for no obligation consultations. During these your principal place of residence. consultations we can discuss your situation, and how it would be affected in the event of illness or One strategy for cutting your land tax bill involves injury, or as a result of your untimely death. We investing in home units, since the value of these can then assist you with implementing an for land tax purposes is usually very low. Even appropriate package of insurances to address owning multiple units rarely generates a large your needs. land tax bill. Another strategy is to target those states which charge less land tax. However, For more information on this topic, to register make sure you check if there are other costs, your interest in attending one of our seminars, or such as high local council rates or stamp duties to make an appointment to speak to an adviser that might work against this strategy. please call 02 9518 3366 or 02 4228 1000 and ask for Michelle. For those wanting to buy multiple properties it makes sense, everything else being equal, to buy them in different states, since each state is able to levy land tax only on land actually within that state. Remember, however, that most states have provisions that, by law, prevent you from claiming a principal place of residence exemption for more than one property, irrespective of which state it is in. It is also important to remember to take into account the different overall land values that exist in the different states. While a state's land tax rate can seem high and the tax threshold ungenerous, when put in the context of much lower land values, the tax payable may be quite competitive. Adapted from “Be aware of Land Tax Bills”, Money Magazine, Beware of Land Tax Bills March 2007 Edition. Investors thinking of entering the residential property market need to take care they factor in the cost of land tax. Just how big a bill you are hit with will depend not only on the underlying land value of the property you buy, but which state or territory it is located. What's more, the more properties you own — whether as investments or as holiday retreats — the higher your tax bill. In particular, while most states allow investors a threshold below which no tax is payable, calculating whether you breach the threshold involves adding up the total land value of all your properties. And forget about getting around this by owning some of your property investments through a private company or a trust, since the treatment of such entities is likely, in most cases, to result in a ACUMEN ADVISERS JOURNAL PAGE 3 • You want to make sure you leave something Good Advice for peace of for your children or grandchildren. mind Who doesn’t need help? If you are confident that you have an effective Part 1 – Do I need a financial strategy in place, then you may not need professional advice. For example: Financial Planner? • If you want to deposit some money for a No matter where you are now, professional short period in a term deposit or cash financial advice can help management account, or another investment with a guaranteed return; or The fact is that no matter what your personal circumstances are now, you probably have some • If you just want someone to carry out a share dream of where you’d like to be in the future. Or transaction for you. In that case, you may you may be in the fortunate position of having wish to seek out the services of a qualified some money to invest. There are many reasons and licensed stockbroker. why you might need professional advice: Ultimately the decision is yours, but if in doubt, it • You are changing jobs or just want to review is wise to have the benefit of financial advice. your options under Super Choice; • You want to plan now for a comfortable Adapted from “Good Advice for peace of mind”, produced by retirement; the Financial Planning Association of Australia Limited (FPA), October 2005. • You have an inheritance, redundancy or other lump sum to invest; • You want to make sure your family is protected if something happens to you or your partner; • You are planning to buy an investment property; • You are single again after a long relationship, due to divorce, separation or the death of your partner; • You are starting your own business; • You are planning a major life change, such as marriage or retirement or moving house; or Important Dates 30 June 2007 – Your last chance to take advantage of the transitional undeducted contribution limit of $1,000,000. 1 July 2007 – Introduction of the new superannuation legislation as announced in last years federal budget. 20 September 2007 – Introduction of changes to Centrelink payments as announced in last years Federal Budget. ACUMEN ADVISERS JOURNAL PAGE 4 ‘Comfortable Retirement’ now $627,581 The cost of a comfortable retirement for an Australian couple aged 65 now stands at more than $627,500, according to the latest Westpac ASFA Retirement Standard benchmarks. This amount takes into account inflation and would enable a healthy couple to enjoy a broad range of leisure activities and a good standard of living. The research also revealed that with a more modest budget of about $339,800, a retired couple could enjoy a lifestyle better than that provide by the age pension, but would only be able to afford basic activities. The national figures, which are released annually and updated quarterly to reflect inflation, also showed that recent drops in petrol and pharmaceutical prices had resulted in a slight reduction in the amount of savings required Upcoming Seminars annually in retirement. Our series of free seminars continues with the following dates and topics now available. ♦ 17 Apr – Super and Retirement Planning ♦ 1 May – Super and Retirement Planning ♦ 15 May – Super and Retirement Planning ♦ 29 May – Insurance - More than Just a Product ♦ 12 June - Estate Planning ♦ 26 June – Gearing for Wealth Accumulation ♦ 10 July - Super and Retirement Planning ♦ 24 July – Insurance – More than Just a Product ♦ 7 August - Estate Planning ♦ 21 August - Gearing for Wealth Accumulation Held in our office, these informative seminars run The most significant offsetting price increases for for approximately 40 minutes. This includes a 20 retirees were the 6.2 per cent increase in the minute presentation and 20 minutes of open price of domestic travel and accommodation and question time. Drinks and light refreshments are the 4.1 per cent increase in the price of then provided giving you the opportunity to speak vegetables. informally with one of our advisers if you wish. Places are limited and fill up quickly. If you or Adapted from “’Comfortable retirement’ now $627,581’, Sara anyone you know is interested in attending these Rich, Money Management, March 8 2007 Edition. seminars, please contact the office on: (02) 9518 3366 or (02) 4228 1000.