Coping alone

Dealing with loss of a life partner after death or divorce can be totally overwhelming.

And to make matters even worse, the time when you are feeling the most vulnerable, frightened and alone, is also the time when many crucial financial decisions often have to be made very quickly.

If you haven’t been the spouse who managed the finances in your household, this can be paralyzing. Whether it’s trying to work out what how to keep running your self managed super fund by yourself or even paying a bill online, we can help you get back on your feet.

You are not alone

The good news is, you are not alone when it comes to securing your financial future. At ITL Financial Planning we have safely guided many clients through this difficult time in their lives.

And we can also help you, regardless of whether it is the first time in your life you have had to make decisions about finances or even if you are used to making financial decisions but are momentarily overwhelmed with grief.

A trusted financial partner

We can provide you with both confidence and peace of mind as you adjust to a different future to the one you previously imagined.

At ITL Financial Planning we know which financial decisions you need to make now and which financial decisions can wait until you feel ready and able to focus on your financial future.

We will liaise with your lawyer, accountant, bank manager and any other professional partners to help you quickly and easily organise all the urgent aspects of your changed financial circumstances, such as:

• changing bank account names
• sorting out wills and probate
• applying for benefits, if necessary
• reviewing your existing loans or financial obligations
• life insurance and superannuation claims

Take away the stress of an uncertain financial future

At ITL Financial Planning we take the time to listen, understand, and focus on you and your needs, allowing us to help you alleviate any uncertainty about your long-term financial future.

And we won’t rush you into any long-term financial decisions, because at ITL Financial Planning we believe in:

• careful and considered planning and investing at the level of risk you feel comfortable with
• a one-to-one, consultative service based on a relationship of trust and understanding
• fully tailored solutions that puts your interests first

If you are looking take away the stress of an uncertain financial future and develop a trusted relationship with a professional financial planner who will take the time to listen, contact us now.

We would love to help.

Buying your first home is an incredibly exciting event…but it can also be a very scary decision.

And because Sydney property prices are some of the highest in the world, buying your first home is more than just about providing for your family.

It may well be the biggest financial commitment you’ll ever make!

Think with your head, not your heart

When you’re buying your own home, it can be really difficult to take the emotion out of the decision and think with your head rather than your heart. Which is why it really makes financial sense to seek unbiased, experienced and honest advice from experts who can help you make smart investment choices.

A place you can afford to call home

At ITL Financial Planning we take the time to fully understand your real estate goals as well as your financial situation, so we can help you make educated and well informed decisions about a place you really can afford to call home.

We can help you with:

• assessing how much debt is safe for you to take on
• budgeting strategies, so you can pay off your mortgage sooner
• deciding if buying a property is right for you and your family over both the short or the long term
• assessing how much deposit is required so you aren’t forced to pay unnecessary costs
• paying off your home loan if you or your spouse is unable to work
• putting you in touch with tax and property law specialists so that you can ensure the property is purchased in the most tax effective and legal structures

Do you need help making smart decisions about buying your first home? Talk to us now.

Are you still living in the family home? Have your children flown the nest or are you now on your own and finding your home too big or too much to maintain? Have you built up a lot of wealth in your property, but don’t have other assets to generate income for you in retirement?

We find many clients find the very concept of downsizing difficult, let alone making the decisions involved. There are many things to consider including:

• When is the right time to sell?
• Do you want to move closer to your family, the city or up the coast?
• Do you still have a mortgage or debts to repay?
• Are you planning on freeing up capital to boost your super?
• Do you need to think about aged care?
• What are the social security impacts?

Helping with the hard decisions

We know that deciding whether to stay or sell is complicated and it can feel overwhelming at times.

And because there’s often a lifetime of memories tied up in your family home, the decision to sell can be emotionally fraught as well as financially confusing.

Whatever your reason for downsizing, at ITL Financial Planning

we take into account your financial position  as well as your personal objectives so we can help you make the decision that is right for you.

Our caring team will take into consideration your reasons for downsizing and also factor in:

• how much money to invest in your superannuation fund and at what age you can access your fund
• the effect selling the family home will have on your estate planning (as your family home is often the most tax-effective way to pass wealth on to the next generation)
• any potential negative effects downsizing might have on your aged pension income and assets tests
• whether downsizing can help you reduce your insurance premiums

Is downsizing the best option for you to meet your future needs and live the life you envisioned, or are there other options?

Talk to us now about freeing up the equity in your family home to make a fresh start.

Written by Nick Lloyd (Financial Adviser)

Let’s face it, there’s no such thing as a DIY super fund as they’re often known. Even if you are a chartered accountant who can do your own set of accounts and tax return, you need an independent auditor to complete the audit and a specialist investment adviser to manage your superannuation investment portfolio. Having your own SMSF means being the trustee and this role comes with a long list of responsibilities and harsh penalties for getting it wrong. If your fund is deemed “non complying”, the fund can be taxed 49% of the fund’s assets! Most trustees engage financial planning and  accounting professionals to ensure they meet the ATO’s compliance requirements and ensure they are maximising the use of their Super Fund.

In setting up the fund, there’s a long list of things you need to get right upfront. These include:

• Completing the appropriate paperwork to execute the trust deed, register the fund with the ATO and add members
• Ensuring each member is a trustee (or director of a corporate trustee)
• Putting in place death benefit nominations
• Documenting an investment strategy which must also consider the insurance needs of members (and review this strategy regularly)

What you are allowed to do outside super is very different to what you can do inside super (especially when using borrowed funds so don’t blindly trust those investment property “gurus”).

The catchall rule for SMSF’s is known as the Sole Purpose Test. To satisfy this Test you must ensure your Super Fund is maintained for the purpose of providing benefits to its members upon their retirement, or for beneficiaries if a member dies. Trustees should ask themselves this question before making pretty much every decision for the fund. 

Here are some answers we’ve given to many clients over the years about what you can’t do inside an SMSF:

• You can’t lend money from your SMSF to a member or their relatives.
• You can’t buy or transfer a residential property into your SMSF from yourself or a related party
• You (or a related party) can’t stay in your investment property owned by your SMSF (even if you are paying market rent).

To make things even harder, the rules are always changing. Whether it’s contribution limits, preservation ages, borrowing in super rules etc. Trustees (or their trusted advisers) need to stay on top of these things to protect trustees from penalties. Even though we keep up to date, there’s always more to learn. We have access to one of the best technical teams in the country and we get to continually learn from these experts through an array of regular and specialised education classes. In addition, we share offices with a specialist SMSF auditor and a specialist SMSF tax adviser, both of which we work closely with. Why not give us a call today to see how we can help ensure your Fund remains compliant and you are maximising the use of your SMSF?

Written by Nick Lloyd (Financial Adviser)

We’re big advocates of the benefits of continually reviewing your situation to make sure you’re making the most of the available opportunities each year. The 30th of June is a key date as it signals the end of a financial year and the beginning of the next. There are contribution rules and penalties for getting things wrong, so we always recommend getting personal financial advice based on your personal circumstances and objectives. Here are 10 ideas that we will be considering with our clients this end of financial year:

Superannuation

1. If you are an employee, salary sacrificing up to the relevant concessional contribution cap.
2. If you are self-employed or have significant investment income or capital gains (ie; less than 10% of your income comes from being an employee), claiming a personal tax deduction for super contributions up to the relevant concessional contribution cap. Contribution caps are a use it or lose it opportunity so don’t miss out on saving up to 34% tax.
3. If you have excess savings or investments that you don’t need access to before retirement, consider transferring this wealth into super. This may reduce tax paid in your personal name and build your wealth for retirement.
4. If your taxable income is less than $49,488 and more than 10% of this came from working, consider making a personal after-tax contribution to super. This may qualify you for a government-contribution of up to $500.
5. If your spouse earns less than $13,800, consider making an after-tax contribution on behalf of your spouse. This will boost your partner’s super and reduce your tax.  You may receive a tax offset of up to $540.
6. If your spouse has less super than you, consider splitting up to 85% of a financial year’s ‘taxed splittable contributions’ with your spouse. This will help to even up your member balances or fund your spouse’s insurance premiums (if insurance is held inside their super fund).

Insurance

7. Pay less to protect your family by holding your Life & TPD insurance through super. Life and Total & Permanent Disability (TPD) insurance can be held inside super where premiums are tax deductible, which can help make the insurance more affordable.
8. Bring forward your tax deduction by pre-paying income protection insurance premiums. If you pre-pay 12 months’ worth of insurance premiums, you can bring forward the tax deduction and reduce your tax this year.

Investments

9. Defer asset sales to reduce CGT (Capital Gains Tax). If you are planning on selling an asset just prior to 30 June, consider selling it a bit later to defer the capital gain, particularly if you might be earning less in the next financial year (eg; Retiring).
10. Offset a capital loss against a capital gain to reduce CGT. If you have already realised a capital gain this financial year but are sitting on an unrealised loss, you could consider selling the loss making investment as part of reviewing your portfolio to offset the gain.

Whilst these ideas might get you thinking, it is important to consider the appropriateness of the strategy in line with your full situation and objectives. Contact us to find out how these ideas can work for you now and in the future.

Written by Shereen Churchill (Financial Adviser)

A common question asked by clients is whether they are better off using surplus funds to pay off their home mortgage or to make an investment.

Generally a client will be better off purchasing an investment if the after tax return of the investment is higher than the savings generated from repaying the housing loan.

Effective rate paid on housing loan*	5%	6%	7%
Marginal Tax Rate (MTR)	After-tax investment return required**
49%       (51%)	10.4%	12.59%	14.75%
39%        (61%)	8.4%	10.1%	11.8%
34.5%    (65.5%)	7.8%	9.4%	11.0%
21%        (79%)	6.5%	7.8%	9.1%
0%         (100%)	5.0%	6.0%	7.0%

*This is the interest paid on the loan net of fees. It does not take into account the running costs of the home (example; home insurance, land rates, water rates, maintenance costs etc)

**After-tax return assumes interest is calculated daily.

Generally speaking in the current interest rate environment (around 5%):

• Balanced investors (earn on average 8% over a 10yr period) might consider investing instead of reducing debt if they are on a MTR of <= 34.5%
• High Growth investors (earn on average 9.5% over a 10yr period) may consider investing instead of reducing debt if they were on a MTR of <=39%

However, it’s important not to consider the numbers at one point in time in isolation. Before we recommend a client invest rather than reduce debt, we always give consideration to:

• Our client’s goals and objectives: What’s more important to you– reducing debt or growing wealth?
• Interest Rate changes: We analyse both the current interest rate environment and the future interest rate outlook. As interest rates rise, it will become less attractive to invest.
• Frequency in interest calculations: How often is the interest on your loan being calculated? This can affect the after-tax return required.
• Investment Timeframe: Investment markets are inefficient and volatile over the short term.
• Liquidity & Accessibility: Your need for access to funds in a timely manner can impact the strategy and the investment options.
• Regular review: It is always important to review any strategy on a regular basis to assess whether it continues to be aligned to you, your goals, the interest rate environment, legislation etc.

Need help deciding if paying off the mortgage or investing is right for you? At ITL Financial Planning we can guide you through the options so that you can make an educated and well-informed decision on which is most appropriate for you. So why not give us a call now.

 

Written by Shereen Churchill (Financial Adviser)

You want to provide for and protect your family, so you don’t think twice about insuring your home and your motor vehicles…and you probably also have private health insurance.

But would you believe me if I told you that your greatest asset is actually your ability to earn an income?

Think about it…

How much did you earn last year?

How many years until you can afford to retire?

Now, multiply these together, and if this amount is greater than the value of your home and car combined…keep reading.

Protect and grow your wealth

As a Financial  Adviser who has been around for over 13 years, I’ve found that clients often seek advice regarding growing their wealth, without first realising the impact of not first protecting their wealth.

And they don’t realise how vulnerable their family is until it actually happens to someone they know …or worse… until it actually happens to them.

10 Common Misconceptions about Personal Risk Insurance

1. It won’t happen to me! 

Although it may not happen to you, it could happen to you… can you really afford to take the risk?

Did you know that 80% of all Australian have at least one of the following cardiovascular risk factors: Physical inactivity, high blood pressure, obesity or smoking?

And with men having a 1 in 2 and women a 1 in 3 chance of disability or injury in their lifetime, the odds are unfortunately stacked against you.

2. I’m young and healthy…I’ll think about insurance when I get older

You may well be surprised to discover that the average age at claim for income protection is 39.4 years and for trauma/critical illness is 42.7 years.

And even if you don’t end up claiming until later in your life, if you start your policy while you’re young and healthy, you will get a better rate, faster loan application processing times and a policy with fewer exclusions.

3. Medicare and the PBS will cover me

If you get a serious illness that requires cutting edge expensive treatment, you don’t want to have to choose between delaying your treatment or outlaying potentially hundreds of thousands of dollars on medicine that is not yet available through Medicare or the PBS.

4. I have private health insurance

Although private health insurance can help with some hospital and medical costs, it does not cover you for many ongoing additional expenses incurred through rehabilitation.

But most importantly, it does not cover the loss of your income, which would have a terrible impact on your family or even put you at risk of losing your own business.

5. My workers comp or sick leave will cover me

Unfortunately, around 85% of long-term disabilities are caused by chronic diseases which are often not work related and therefore not covered by your workers comp.

And while your sick leave works well for when you have a short term illness, at approximately 10 days per year, it will not be sufficient if you suffer a long-term illness.

6. My super has death cover and salary continuance

Often the default death benefit you have in super is based on a formula, not your individual needs, and 95% of families do not have adequate insurance.

If you don’t meet the SIS super condition of release, you cannot access the insurance claim from your super fund. And if your salary continuance and other personal risk insurance cover is through an employer super fund, you may not be able to keep it on leaving an employer.

7. My life cover will clear my debt when I die

While it’s a huge relief to know you will be able to clear all your debts, your family will still have many ongoing expenses, such as groceries, rates, petrol, school fees & child care.

Will your spouse be able to support your family without you?

8. Insurance is too expensive

Did you know you may be able to take out insurance for a little more than the cost of your morning takeaway coffee? If you are a non-smoking 35 year old male earning $80,000 p.a., just $5.59 a day will obtain you $750,000 life cover, $750,000 TPD cover, $250,000 trauma cover and $4,500 per month income secure cover.

9. I can get insurance cheaper off the internet

At ITL Financial Planning, we can tailor an insurance policy for you with a higher quality contract, with a higher likelihood of claims payout and it will often be cheaper too.

Furthermore, our tailored policies are also structured appropriately for your individual tax and estate planning needs.

10. Insurers never pay claims

The Australian life insurance industry paid more than $7 billion in claims in 2014.

If you need to claim on your policy you’ll be relieved to know that across the industry, only 4% of claims on policies recommended by an adviser are declined, in comparison to 50% of claims made on policies sold by telemarketers or the internet.

At ITL Financial Planning, we will deal directly with the insurers to get your claim paid as quickly as possible. This saves you the time and hassle and allows you to focus on your health and/or loved ones.

Wealth protection is not an easy conversation to have

Let’s face it, nobody wants to think about death or disability.

But because you love and want to protect your family, both now and in the future, it’s an important conversation to have.

At ITL financial Planning we understand insurance and we also understand that your loved ones are priceless.

Life insurance is one way of showing them how much you love them even after you’ve gone.

Which is why it’s important to have the difficult conversations now.

Let’s have a chat.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

Written by Nick Lloyd (Financial Adviser)

Imagine this.

You set sail alone to a distant destination in an empty boat without sails, a motor, a compass or a rudder.

You drift over the ocean, at the mercy of the prevailing winds, buffeted by huge swells, with no control over where you are going and no idea of when you will sight land again, let alone reach your destination.

Sounds scary, doesn’t it?

Now picture this.

You set sail in the same boat, but this time with an experienced skipper, GPS navigational equipment, a compass, sails, a fully serviced motor and a rudder.

You’re sailing on the same ocean, encountering the same prevailing winds and huge swells, but your boat is correctly equipped, you have confidence in the boat and your skipper has the experience to keep you on course…

…ensuring you reach your destination, on time and in one piece.

Your best chance of financial success

A clearly prepared, well supported investment philosophy is your financial compass or rudder, a road map that guides you to your destination and plots your course.

And an experienced financial adviser will work as your skipper, ensuring your finances stay on track regardless of the challenges life or the financial markets throw at you.

Together, they’re a winning combination…and your best chance of financial success.

Our Investment Philosophy

At ITL Financial Planning we tailor an investment strategy for your individual needs, based on our experience and consider all the following investment philosophies:

• Preserving capital is our top priority to prevent loss and ensure your income objectives can always be met.
• Diversification reduces your risk.
• Strategic asset allocation is the main driver of our investment returns – we are constantly reassessing and rebalancing your portfolio to maintain the appropriate level of risk you feel comfortable taking.
• Franked dividends are highly valuable for lower taxed entities – if you’re retired, tax effective investment income can provide the majority of your cashflow for retirement.
• Investment markets are inefficient over the short to medium term.
• Index share market returns are not necessarily aligned to your objectives because due to the concentration of banks, miners, grocers and a telco, the makeup of the ASX200 is not a diversified portfolio.
• Less volatile companies are positive for portfolios.
• Time in the market is more important than timing the market—it’s vital to remain patient and rational in decision making.
• The larger the market, the less scope to achieve alpha (ie. beat the index) and therefore index returns via low cost Exchange Traded Funds (ETF’s) can be preferable in well-developed international markets like the S&P500 index in the US.

A clear vision of where you’re going and how you plan to get there

At ITL Financial Planning we proactively manage your finances with as much commitment and interest as we do our own, constantly seeking to maximise your wealth.

And our investment philosophy can help you stay on track with your long-term goals, regardless of any short-term distractions.

Looking for a bespoke investment strategy based on experience and a proven investment philosophy?

Talk to us now.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

Written by Nick Lloyd (Financial Adviser)

What is the first thing you do before making any investment?

Research the market?
Budget how much you can afford to invest?
Assess the level of risk of the investment?

At ITL Financial Planning we always start with a chat. We take the time to understand your values, your goals and the level of risk you feel comfortable with.

So we can work in partnership with you to build a bespoke financial plan that is truly tailored to you and your family, at every stage of your life.

How we construct your portfolio

Our experienced advisers construct your individually tailored investment portfolio based on our tried and tested approach.

We strategically allocate your assets and chose your investments based on:

• your tolerance to risk
• your objectives, both short- and long-term
• your individual needs (returns, liquidity, income vs growth)
• your situation (size of portfolio, costs, tax considerations)

For example, if you are a wealth accumulator investing in a high tax rate environment, we would seek out investments where income is lower but capital growth is higher.

But if you are in your retirement phase (and in a tax free pension) we would guide you towards high-yielding Australian shares which pay fully franked dividends.

We also give consideration to the allocation of different industry sectors (eg. financials, commodities, consumer staples, healthcare, industrials etc), building your portfolio both from bottom up and top down perspectives (ie. the outlook for each individual company, as well as each industry sector).

And our extensive and ongoing market research includes analysis of charts, statistics and common risk profiles.

A Complete Range of Investment Options

At ITL Financial Planning, there is no one size fits all. We offer a highly personalised service. We tailor your investment portfolio exactly to your needs. In constructing your portfolio we assess every asset class individually. We may include all or some of assets like:

Cash Holding Accounts: We look for cash holding accounts that offer you competitive interest rates, no fees and full online banking, including BPAY.

Term Deposits: We assess the suitability of Term Deposits by reviewing the competitiveness of interest rates (over and above the advertised rates), the size of the financial institutions, strength of their balance sheet, maturity date of the term deposit and their interest payment cycle.

Australian Equities, We don’t aim to try and replicate the ASX200 index, we aim to invest in companies that provide increasing dividends over the long term, balancing both your growth and income needs with your tolerance to risk. Our criteria for choosing stock includes:

• An industry leading position
• Good management
• A history of increasing earnings and dividends
• As much as possible, predictable earnings
• Research analyst reports
• Market movements

International Equities: We look for international exposure that is low cost, well diversified and has the ability to choose geographical areas (if desired).

ASX listed Hybrids: offer fixed interest exposure, equity-like liquidity and regular (quarterly or semi-annually and generally fully franked) income.
Diversification is important with hybrids because these securities are more risky than term deposits and annuities and capital is not guaranteed. But we always educate you so that you fully understand where your hybrids sit in the capital structure and how each hybrid differs.

What do you want your financial future to look like?

Are you ready for us to create for you a personalised portfolio

And a proactive and flexible financial plan that anticipates your future needs and evolves to meet your life challenges?

At ITL Financial Planning our performance speaks for itself and our proven process begins with a thorough understanding of you, your goals and what you want your future to look like.

Talk to us now.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.