Fortune favours the savvy by lindash

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									                                                                                                                         January 2009




                                                                                                                                                                                           Yul Russell


                   INSIDE:                        How to build a bigger nest egg                                                                  Mum gone in a flash



     Fortune favours the savvy
  ANYBODY who still thinks they can
                                                                                                                                                                           SO you splashed out and spent
  avoid taking charge of their retire-                                                                                                                                     $2000 on a big plasma TV for
  ment planning should have been                                                                                                                                           Christmas, eh? You might like to
  jolted into reality by a global report                                                                                                                                   know that had you invested that
  card on poverty that showed                                                                                                                                              money instead, in 25 years it’d be
                                                                                                                                                                           worth about $5,175 (in today’s
  Australia’s retirees are the fourth                                                                                                                                      money equivalent, assuming re-
  poorest in the developed world.                                                                                                                                          turns of 7 per cent a year net of
    The Organisation of Economic Co-                                                                                                                                       fees and taxes reinvested, and 2.5
  operation and Development, as reported                                                                                                                                   per cent annual inflation).
                                                                                                                                                                             And if you invested the $200 a
  this month, has found that half our sin-                                                                                                                                 month you spend on cigarettes, it
  gle retirees are living in poverty, defined                                                                                                                              would grow to about $87,400 in
  as less than 50 per cent of average earn-                                                                                                                                today’s money in 25 years. That’s
  ings. And 27 per cent of all our retirees                                                                                                                                also about what $50 a week on
                                                                                                                                                                           beer will cost you.
  (including couples) are in poverty.                                                                                                                                        Don’t think $4 a day on a cup of
    With the single pension currently set                                                                                                                                  coffee matters? Invested instead it
  at a maximum of $281 a week, it’s clear                                                                                                                                  would be worth about $52,435 in
  that it’s foolhardy to rely on government                                                                                                                                today’s money in 25 years.
  to fund anything but a miserable retire-
  ment full of scrimping and struggle.                                      lent, assuming 2.5 per cent inflation a                                   $600 a week), enough to fund the type
    Of course, nowadays there’s the Super                                   year) to fund your golden years.                                          of retirement you want? Think how
  Guarantee Contribution that sets aside                                      That would provide a pension income                                     quickly you burn through $600 now.
  9 per cent of workers’ pay packets for                                    of a bit less than $17,000 a year (in                                       And actually, by the time you buy a
  retirement, but it’s dangerous to assume                                  today’s money equivalent). But if you                                     caravan and take your big overseas trip,
  this means you can forget about your                                      were able to achieve 7 per cent net, the                                  there may be considerably less than
  retirement nest egg until the boss gives                                  balance would grow to $440,000 and                                        $440,000 in the kitty.
  you the gold watch.                                                       generate a retirement income of nearly                                      But it would take just $80 extra a
    Firstly, it’s crucial to wring the most                                 $31,000.                                                                  week tipped into super through salary
  out of this 9 per cent. By way of exam-                                     That’s why it is crucial to consult with                                sacrifice to take the total to $40,000 a
  ple, say you’re 35, earning $60,000 a                                     a financial adviser to make sure you are                                  year (in today’s money) in pension in-
  year, with $80,000 in you super already.                                  in the appropriate asset classes, and                                     come, which equates to a very handy
  If you achieve 5 per cent a year (net of                                  holding the best investments within                                       $175 extra a week, or $775 a week in
  fees and taxes) until your retire at age                                  those classes.                                                            total.
  60 you’ll have a tad more than                                              And secondly: Is $31,000 a year in                                        *Calculations by Colonial First State.
  $300,000* (in today’s money equiva-                                       today’s money equivalent (or about                                                          Take charge of your retirement
                                                                                                                                                                       to make sure it is all you desire.
        If you think this newsletter would interest friends and family, please forward it on                                                                             Contact us to make it happen.


Yul Russell is an authorised representative of WealthSure Pty Ltd, AFSL 238030, ABN 93 097 405 108. The information contained within these articles is of a general nature only. Whilst every care have been taken to
ensure the accuracy of the material contained herein at the time of publication neither the author, authorised representative, nor licensee will bear responsibility or liability for any action taken by any person, persons or
organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material
contained herein but instead should satisfy themselves independently of the appropriateness of such action. WealthSure Pty Ltd: Suite 1, 34 Hasler Road, Herdsman Business Park, Osborne Park, WA, 6017




       How to contact us                                 Email: admin@twenty20advisors.com.au                                                                                       6/111 Flora Terrace
                                                                                                                                                                                    PO Box 363
       Phone: 08 9203 7100                               Fax: 08 9203 7200                                                                                                          North Beach WA 6920

                                                                                                                                                                                                                              1
                                                                                                                   January 2009


                                                                                                                                                                                             Yul Russell




         DIRECTSPEECH                                                      Stocks hold their own
       “DON’T despair - good times will                                    SHAREMARKET: Australian stocks
       return. Thankfully, a bear market is                                were flat for the month. The All Ords                                                    MONTHINREVIEW
       always followed by a new bull mar-                                  index closed at 3494.9 on January 16,                                        boosting consumer spending, his top
       ket. Fresh record highs will be set.                                from 3492.3 on December 16. The S&P/                                         economic adviser Lawrence Sum-
       Eventually.”       Finance writer Philip
                                                                           ASX 200 closed at 3550.9 on January 16,                                      mers said.
                             Rennie in Money magazine.
                                                                           from 3557.4 on December 22.
       “THE great bull market of 2009 to                                                                                                                THE BUCK STOPS: Rio Tinto
       2015 starts. A bull market is a bit                                 INFLATION: A key measure of annual                                           chairman Paul Skinner was ousted, as
       like falling in love: you don't know                                inflation has fallen to a three-and-a-half                                   the fallout from the failed takeover by
       it has happened until long after the                                year low. The TD Securities-Melbourne                                        BHP Billiton and poor iron ore results
       fact. Stocks have plummeted and                                     Institute inflation gauge for December                                       weighed heavily on the mining giant.
       priced in everything short of the                                   fell by 0.2 per cent, after a 0.6 per cent
       greatest depression of all time.                                    fall in November. The inflation gauge has                                    KERRY’S BOY: James Packer, son
       Over the course of 2009 and 2010,                                   dipped for three consecutive months for                                      of the late media mogul, Kerry Packer,
       markets will gradually climb again.                                                                                                              was in advanced talks to sell his cattle
       Most experts will dismiss that at
                                                                           the first time since the series began in
                                                                           2002, with falls in petrol, fruit and vege-                                  stations for about $A425 million to a
       first as a dead-cat bounce, and
       then as a bear-market rally. In                                     table prices driving the latest monthly                                      British private equity firm, Terra Fir-
       about 2011, a few will start de-                                    decline. Annually, the inflation gauge                                       ma, it was reported.
       scribing it as a bull market, and                                   measure grew by 2.2 per cent, the lowest
       pretty soon the whole show will be                                  rate of increase since May 2005, and be-                                     PROPERTY: First timers have re-
       on again.”        Age writer Matthew Lynn                           low the peak of 4.8 per cent in June 2008.                                   turned to the housing market as gov-
                      gazes into his crytal ball for 2009.                                                                                              ernment grants, low interest rates and
                                                                           STIMULUS: Australian Treasurer                                               inducements from developers boosted
       “ON balance I think the market is                                   Wayne Swan said he stood ready to                                            activity. For the first time in six years,
       better to buy than sell. Even ad-                                   spend more money to keep the economy                                         the proportion of first home buyers has
       justing for cyclicality in earnings,                                afloat, but he would not rush into a fur-                                    climbed over 20 per cent, the Austral-
       value is starting to emerge across                                                                                                               ian Bureau of Statistics said.
       the board, particularly if you are
                                                                           ther economic stimulus package. The
       prepared to take a three-to-five                                    Government needed to see more data
       year view.”     Perpetual head of equities                          first, he said. Anecdotally, it appeared
                                                   John Sevior             that the last stimulus package - the $10.4                                        LEARNING CENTRE
                                                                           billion pre-Christmas spree - had a sub-
       “A RALLY on the S&P/ASX 200 to                                      stantial impact on the economy, Mr Swan                                          INFLATION: In economics, it’s a
       around the 4800 level seems fea-                                    said. Meanwhile, the Prime Minister,                                             rise in the general level of prices of
       sible given current valuations com-                                 Kevin Rudd, said: “We will (govern)                                              goods and services in an economy
       bined with an unprecedented level                                                                                                                    over a period of time. Inflation can
                                                                           with a combination of steely economic
       of stimulus.”                                                                                                                                        also be described as a decline in the
                Matthew Drennan, Zurich Investments                        management and compassion for those
                                                                           who need support.”                                                               real value of money. When the gen-
                                                                                                                                                            eral price level rises, each unit of cur-
       “THE conditions in Australia for
                                                                           UNITED STATES: New US President                                                  rency buys fewer goods and services.
       those seeking to enter the property
       market are ideal.”                                                  Barack Obama’s economic stimulus                                                 A chief measure of price inflation is
                         Mortgage broker John Kolenda                      plan will favour infrastructure and job-                                         the inflation rate, which is the percent-
                                                                           creation projects over tactics aimed at                                          age change in a price index over time.



Yul Russell is an authorised representative of WealthSure Pty Ltd, AFSL 238030, ABN 93 097 405 108. The information contained within these articles is of a general nature only. Whilst every care have been taken to
ensure the accuracy of the material contained herein at the time of publication neither the author, authorised representative, nor licensee will bear responsibility or liability for any action taken by any person, persons or
organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material
contained herein but instead should satisfy themselves independently of the appropriateness of such action. WealthSure Pty Ltd: Suite 1, 34 Hasler Road, Herdsman Business Park, Osborne Park, WA, 6017




       How to contact us                                 Email: admin@twenty20advisors.com.au                                                                                       6/111 Flora Terrace
                                                                                                                                                                                    PO Box 363
       Phone: 08 9203 7100                               Fax: 08 9203 7200                                                                                                          North Beach WA 6920

                                                                                                                                                                                                                              2
                                                                                                                   January 2009


                                                                                                                                                                                             Yul Russell




Gone for good
in two minutes
LIFE can be cruel sometimes.
  Just ask Darryl Pickett. In late Novem-
ber he and wife Karen were out on the
town enjoying a work Christmas party.
  A fun night of limos, dinner, cocktails
and the bright lights of Brisbane’s
Treasury Casino suddenly turned into a
horrific nightmare of sirens and ambu-
lances after Karen, aged only 42,
abruptly collapsed and died from a heart
condition she didn’t even know she had.
  “Everything was perfect,” Darryl told


                                                                             Build a bigger nest egg
a newspaper.
  “We were walking along and Karen
said she didn't feel well. We sat her
down and then she stopped breathing.
  “It happened in less than two minutes.”                                  SALARY sacrifice: They need to
  Karen was taken to hospital but could                                    change the name. “Sacrifice” implies                                        STRATEGIES&TACTICS
not be revived.                                                            giving something up and getting noth-
  Darryl then had to tell their eight-year-                                ing in return. But the opposite is true                                    (for more specific details about
old triplets, and Karen’s 17-year-old                                      when you salary sacrifice, which in-                                       “conditions of release”, please contact
daughter, that Mummy was gone and                                          volves contributing some of your                                           us. Our details are below).
she wouldn’t be coming back.                                               hard-earned to superannuation before                                         But you can have too much of a good
  The Picketts’ plight is another stark                                    you have to pay income tax on it.                                          thing, says the Government, which im-
reminder of the importance of adequate                                       Say you earn $70,000 a year and de-                                      poses limits on the amount of pre-tax
life insurance. Sudden misfortune can                                      cide to “sacrifice” $10,000 to your su-                                    money that can be poured into super.
strike anybody, anytime.                                                   per. It will attract just a 15 per cent                                      The maximum amount your employer
  Darryl, who also has two sons from a                                     contributions tax ($1500 in this case)                                     and you can contribute pre-tax in any
previous relationship, must now shoul-                                     rather than the 30 per cent* ($3000) that                                  one financial year is $50,000. You will
der the full effort and expense of run-                                    would usually be lost to income tax.                                       have to pay tax at the rate of 31.5% on
ning the household.                                                          This leaves you with $8500 to invest                                     excessive contributions.
  If Karen’s life were adequately in-                                      rather than $7000. The higher your tax                                       However, if you’re aged over 50, or
sured, however, the financial blow to the                                  bracket, the more you save.                                                turning 50 before 30 June 2012, a transi-
family would not be as great as the                                          Already you’re ahead, but it gets better                                 tional period, ending on 30 June 2012,
emotional one. Darryl would be able                                        as investment returns are taxed at a max-                                  allows you to contribute extra.
fund care for the kids when needed, pay                                    imum of 15 per cent in super, rather than                                    Once you turn 50 (or if you’re already
for help around the house, or cut back on                                  at your marginal tax rate (in this case 30                                 50 or older), you can contribute up to
his paid work to do those things himself.                                  per cent) outside super.                                                   $100,000 in each financial year up to 30
                Shield yourself from life’s                                  Again, the higher your marginal tax                                      June 2012 including the financial year
          misfortunes. Please contact us.                                  rate, the greater your advantage.                                          during which you turn 50.
                                                                             Remember though that because this                                          *Calculations exclude Medicare levy.
     If you think this newsletter would interest
                                                                           money is in superannuation you won’t                                              Hatch a plan to enjoy your golden
    friends and family, please forward it on                               be able to access it until retirement age                                        years. Contact us to make it happen.


Yul Russell is an authorised representative of WealthSure Pty Ltd, AFSL 238030, ABN 93 097 405 108. The information contained within these articles is of a general nature only. Whilst every care have been taken to
ensure the accuracy of the material contained herein at the time of publication neither the author, authorised representative, nor licensee will bear responsibility or liability for any action taken by any person, persons or
organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material
contained herein but instead should satisfy themselves independently of the appropriateness of such action. WealthSure Pty Ltd: Suite 1, 34 Hasler Road, Herdsman Business Park, Osborne Park, WA, 6017




       How to contact us                                 Email: admin@twenty20advisors.com.au                                                                                       6/111 Flora Terrace
                                                                                                                                                                                    PO Box 363
       Phone: 08 9203 7100                               Fax: 08 9203 7200                                                                                                          North Beach WA 6920

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