Sunlife Case Study – Jason and Louise
Jason & Louise
Clients situation when we first met
Business owners, 2 two young children
Home $600,000 (no debt)
Savings (large amount of savings, not invested)
Super ($20,000 each)
Jason & Louise had been managing their successful business for many years, having paid off their home (no debts) and accumulated a large amount of savings over the years. But like most business owners, they had very minimal super and no investments. They were paying a lot of tax and had no investment strategy or any real plans other than to continue saving money in the hopes they would have enough for retirement. They felt financially in control (as they had no debts and were quite disciplined with their savings plan), but they weren’t very confident in their financial future as they knew they could be doing more with their money but didn’t know where to start or who to turn to for advice. They had considered investing in property but were “put off” by the stories they’d heard from people they knew who’d had bad experiences. They also wanted to have adequate insurances in place in case anything was to happen to them (as they have a young family). Their accountant referred them to us for advice on reducing tax, arranging their insurances and to start an investment portfolio.
- Reduce tax liability
- Start an investment strategy to build wealth for the future
- Have adequate & cost effective insurances in place to protect their family and incomes
- Take control of their Super and have a professionally managed portfolio
- Have the ability to pass on wealth through generations
To reduce their personal tax liabilities, we introduced the concept of “personal contributions” into their Super funds. Jason & Louise had very little Super as they had not been contributing over the years (they lacked confidence in “the share market”), but they immediately took advantage of the tax concessions by maximising their contributions which resulted in a tax saving of around $24,400 p.a.
We also established a Self-Managed Super Fund (SMSF) with a corporate trustee and created a professionally managed investment portfolio to give them the confidence to feel good about contributing towards their Super. This was in conjunction with a medium-term investment goal of building up enough capital in their super fund to be able to consider having an investment property in the future (as they felt more comfortable with “bricks & mortar” as a form of creating wealth and having rental income).
As Jason & Louise had an interest in investing in property, they explored the concept of owning an investment property as a leveraged investment and were able to free-up some equity in their home to buy their first investment property in a high growth suburb close to Brisbane. This also resulted in further tax savings, and for the first time in more than 10 years, Jason & Louise actually received a tax refund from the ATO!
For their cash savings, we invested this in an actively managed investment portfolio (with a “balanced” investment strategy to reflect their risk profile) with a target return of CPI + 3% (total of 7% p.a.). That was more palatable for them as the return on cash was less than 1.5% in the online saver they were using.
(By the way, they still maintained control of at least $100,000 which they held in a separate bank account and used as working capital for their business, giving them a greater level of comfort and flexibility knowing they could access funds at any given moment should they need it).
Jason and Louise also have a comprehensive and reliable protection strategy consisting of Life, Total and Permanent Disability, Income Protection and Trauma insurances. By placing some insurances within super their personal cash flow has increased by more than $11,000 p.a.
Jason & Louise are well on track to achieve their goal of more than $1M in 10 years, in fact they are on track to have over $2M in income producing assets, and they now have a clear plan to transition to retirement at age 55.
Here’s what Jason & Louise have to say:
“We were very hesitant to begin with as we were so used to working hard, saving money and not taking any risks, but we could see how much better our situation could be and how it would benefit us in the long term. We immediately felt comfortable with Steve Luman, not only because he’d been recommended by our accountant of many years but also because he took the time to understand us and listened to what we wanted to achieve and what was most important to us. He discussed his recommendations in detail and made sure we were comfortable and understood everything he was proposing.
The strategies we have in place are saving us a lot of money in taxes and we feel a lot more confident in our financial future now that we have invested our money. We are very happy with the professional service and advice we have received from Steve Luman and his team, and we highly recommend Sunlife Group.“
Jason & Louise
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