Advice would be great: what would you do?

MCM,

I'll answer those ones for you:

Q: Do they assist in property selection?
A: Yep, if you want that service. A Navra guy named Roger Frusca (sp?) is running around Brisbane helping Navra clients buy properties up there at the moment. Of course, they take a commission from the builder on the new development for the service. They won't assist you to buy established housing stock as there's no commission in it for them.

Q: or is it more just what allocation you should have to property?
A: Yep, that too. And this is their primary service as Navra Financial Services (NFS) which is the financial planning arm of the business. They will assist you in mapping out your asset allocation mix based on your income and expenses and risk profile and will also do the usual insurance recommendation stuff etc. Fee for this stand alone was $1100 incl GST last time I checked. Its a good service for the money.

Q: Also, roughly what are the costs involved in seeing these planners and accountants?
A: Other than the $1100 mentioned above, they also charge an entry fee for new clients into the Navra Aus Retail share fund if you choose to go down that path. They recommend this normally as part of their balanced "structure" as it fits the cash flow bill for subsidising the holding costs of negatively geared growth IP assets. The fee for this is $5500, but the $1100 financial planning fee is counted towards this so ends up costing $4400 additional. This presumes you buy "biggish" as there is a scale within that fee. Of course, if you do a search on this forum you'll see there's other ways of getting into that fund that might save you a few bucks.

A: They also make a commission if you use their mortgage broker. Its all declared and above board and I used him so I could "feed" Navra a bit more for the service they gave me. If I'd sourced my own broker I probably would have got the same service but Navra would have been poorer by my doing so.

Think that about covers it. Oh yeah, if you do go Navra Financial Services, ask for Mark Raymond by name. He's the senior guy there and all the paraplanners work for him. On your income he should handle your case.

Cheers,
Michael.

 

IMHO you're better off saving your money than spending ~$5k on a plan that is 75% cut and pasted from the next Joe's plan*, but horses for courses.

I recommend writing your own financial plan after educating yourself about the world of investments. I think self-education is the best investment.


* For legal reasons I might add that I am not necessarily referring to NFS.

 

maybe I missed it amongst the threads, but what do you do to earn $300k? prehaps I could learn from you how to improve my income

I would suggest seeing a financial planner, with your income, a quality plan from the start could save costly mistakes down the track. Since your not really experienced with investing, paying for quality advise could be the way to go.

 

MichaelWhyte, that seems to make sense. I'll consider Navra. Everyone on this site seems to think highly of them.

Glebe, would you rather spend $5k going through a plan with a financial planner or $5k getting a structure together with an accountant?

 

What I would do

Hello,

If I was in your situation I would make sure my salary was packaged tax effectively.

Even at a relatively young age I would not ignore super. Salary sacrificing into super is taxed at 15%. There are limits on how much can be salary sacrificed into super but salary sacrificing something will save some tax.

I would look at using equity in your PPOR to establish an investment portfolio which could be geared.

I would concentrate on paying any non deductible debt.

With a wife and child on the way I would look at updating wills and making sure my insurance was adequate.

I would also try to learn new skills and experience all that life has to offer.


Johnno

 

Johnno, thanks for your comments and full marks for thinking of all those issues.

I'll probably get shot down for saying this - I don't believe in super. I believe it has many benefits for many people, but I don't agree that I have to lock away money that I can't tap into. I hope I haven't offended anyone, as I know how passionate some people are on this. It's just my stubborn view.

I do believe in having some insurance though, which I have. As for wills, it's something I've been meaning to look into.

- MiddleClassMonkey

 

I felt the same way MCM, then i established the SMSF which gives me back some control (and interest in Super) this year was the first I tipped in additional funds rather than just let the employer 9% roll in ( i cant see Super being as good as what I can do outside of it, but at least I have that control)

As Johno said, Salary Sacrificing may have benefits as well.

What interests do you have and what kind of involvement are you chasing in your investments I guess would be a good question

As per Michaels post I looked at my own situation in the same light, I've been taking baby steps with Shares and Managed Funds and Maths is definetly a weak point (I like excel though and can at least make pretty colours ), Property has been another story for us and we're looking for IP#6 and have acquired the last two in a Trust Structure and will do so with the next

Assets:
PPOR $0
IP $1,600,000
MF $100,000
Land $0
Super $100,000
Cash $5,000
TOTAL Assets: $1,600,105


Liabilities:
PPOR mortgage $0
IP mortgage $954,000
MF borrowings $100K (from LOC, soon to have a ML against as well which should increase Total Managed Funds)
TOTAL Liabilities: $1,054,000

I'm sure you have a huge range of options available to you, at the end of the day its what suits your 'personal' comfort zone, as its your signature on the documents, not the Financial Planners, Accountants etc.....worse still though you can get information overload and Analysis Paralysis and do nothing (which should be a crime )

Maybe play around with different scenarios, there's some great spreadsheets here and over at Somersoft Home You can also download a trial version of PIA there to look at projections for property; I also like the NZ Site Home page | Sorted for Goals and Calculators


We sorted our Wills last year and have Term Life Insurance (via Super)to Pay out Loans; with three (3) kids and a wife that stays at home looking after them, we needed to cover our bases and will probably review this year again as we're always learning..

 

Hi mcm

Nothing wrong with not believing in super as long as you are doing alternative investments. This is obviuosly why you are here so all's OK

Seriously, super can play a part particularly in regard to tax effective investing. In your case within 2 years you could have enough in your super to have a SMSF with $100k. The benefits are the 15% entry and no exit tax. The other advantage is that the super fund can pay for your live insurance which is not tax deductable if you organise it direct.

Another advantage is that in your case you will no doubt accumulate a substantial amount into super regardless (9% x $300k = $27k) just from your employers contributions. So by just adding a little bit (that $50k) for a year or 2 you can then roll that into an SMSF and control those accumulating funds yourself.

I agree that you should elliminate your personal debt ASAP.

I would immediately regear the PPOR taking it to 80% LVR and using an offset (just in case you change the PPOR to an IP later).

I would also sell the shares, deposit the money in the offset and then redraw to buy them again. (need to be aware of CGT). Doing this would immediately reduce your non deductable loan amount by at least that $20k.

I would then start depositing all salary into offset (and any other funds) so that when finally you decide your investment direction you have changed as much non deductable debt into deductable debt.

What MW hinted at is that you can invest into any MF's by using invest smart who will rebate all entry costs and also rebate any trailing commissions over $400 odd. Very good way to ensure you are achieving maximum returns.

Having done all you can do immediately now you can sit down and ponder any further options as per all the other advice so far.

Cheers

PS RW posted whilst I was responding

 

A couple of pointers

If you are looking to take control of your investments, I'd definitely suggest including an SMSF and not ignoring super entirely. When you consider 15% tax rate and currently no tax on withdrawal after 60, it's an ideal way to help fund your retirement. Sticking in say an extra $20K per year would hardly be noticed after the tax difference, and you need to remember you're limited in how much you can get in each year, so come 50-60 if the rules haven't changed significantly, your retirement could be looking considerably different if you have a large tax effective income stream available.

Not everyone wants to owe millions in retirement to keep things tax effective!!

Don't make it your whole strategy, but given you're income I think you should be aiming to grow a good sized super fund. And you can enhance that with share warrants and property warrants (hopefully more available in the next couple of years), so get some real grunt into your super fund.

Outside super, with a baby on the way don't forget there are some tax consequences of income in your wife's name. A 20% reduction in Family Tax Benefit Part B (only assessed against the lower income earner's income) as well as 15% income tax above $6000 per year could mean a higher income tax rate for your wife than yourself depending on how aggressive and tax effective you are when you get things up and running.

If you can salary package, don't rule out buying properties as tenants in common and salary packaging the deductible expenses to increase your tax benefit and effectively switch some income to your wife. I won't go into it, but look up Julia's articles or website for more info if interested.

Consider whether your have work related liability issues when deciding on structures.

Get your wills done!!

Lastly, don't try and pick the market, and don't wait to pay off your house. Get started now, and as you build equity in your house you can do more. Ignoring the suggestion you could pay off your house in 2 years (I assume you eat and have some level of lifestyle!), if you wait 5 years to pay off your house first, you could miss out on 5 years of growth in the property or share market. Markets might stay flat for the next 5 years (I hope not!), but if you're in it for the long haul, the sooner you get in the better.

I bought shares in May, and have been up 10%, down 10%, up 15% and am back to about 3% up during the last 7 months. If I tried to spot the buy and sell signals, I can almost guarantee I'd be down significantly on my capital, as I'd have missed a lot of the upward movement waiting for confirmation of the trend, and locked in the losses as the markets fell, then again missed the gains back up waiting for confirmation.

Likewise, all the media was suggesting a flat property market, but my Melbourne properties have done very nicely during the first half of the year as prices headed ever upwards. So I'm a big believer in continuing to invest as you have the funds available, without overcommitting.

 

Absolutely...

Super is even more tax effective when you don't have to pay capital gains tax when you sell the assets (in pension phase), compared to outside of super you have to pay CGT based on your marginal tax rate. If you made a profit of $1,000,000 on selling an asset, you'd be up for some pretty steep tax (Approximately $444,600 including Medicare Levy) versus $0 if you do it right inside super/pension. That's a lot of good reasons to use superannuation.

Cheers,

Dan

PS This is general information. Speak to your FPA registered Financial Planner before making an investment decision.