Simple Strategies to build an extra $1.5M, over 15 years

About Charlie:

Charlie is a single dad aged 40 and earns an annual income of $120,000. He has an apartment worth $500,000 (with an outstanding loan of $250,000) and a superannuation balance of $100,000. Charlie is interested in reviewing his current financial situation to see how he can generate more assets and save more tax.

What Happened:

Charlie decided to use a combined asset accumulation strategy involving a direct property, managed funds and superannuation. He was interested in saving tax, growing his assets and also having a diversified investment portfolio to reduce his investment risk. He was particularly interested in buying an investment property in the short term due to the low interest rate environment, recovering property market and tax benefits associated with this type of asset. Charlie’s combined strategic approach (property, shares and super) allowed him to position himself to achieve his ‘asset accumulation goals over just a 15 year timeframe. With a weekly commitment of just $200 per week Charlie felt comfortable that he had a strategy that would achieve the following outcomes:

  1. His home loan paid off 6 years earlier
  2. An additional $1.5M in assets
  3. Full insurance cover for his incomes and debts built into the $200 per week cash-flow commitment.

Charlie’s Financial Results:

Charlie wasn’t interested in the standard ‘financial adviser’ recommendations of just buying more managed funds or buying more insurance. Charlie wanted a genuinely ‘combined’ approach to asset growth so he decided to improve how his superannuation was invested (he moved away from the standard balanced option that would have cost him about $200,000+ over a 15 year period), he used his home equity as the deposit for an investment property which produced positive after tax cash-flow and additional tax savings, and he used a small portion of his home equity to invest in a growth oriented share fund where he added to this fund every month using a small share loan (which he found was a safer way to buy shares with borrowed money at the same time that his borrowings accelerated his share assets).

He also made sure that his growth assumptions for all of his investments were at least 50% below the historical averages so that he could be more certain that he would achieve his financial goals over the timeframe of 15 years.

If you would like to see how our Financial Management Team can assist you to model a ‘combined’ strategic investment approach similar to Charlie’s then please contact us for a no cost review.

Disclaimer: The case study mentioned above is purely for illustrative purposes and should not be relied upon (or acted upon) in any way. Readers should seek professional advice before acting on any of the information in the case study above. All general advice in this case study is provided by Luke Russell sub-authorised representative of Financial Management Partners Pty Ltd as trustee for The FM Trust (ABN 50 743 553 476) Corporate Authorised Representative (No. 440627) of GPS Wealth Ltd AFSL 254544 ABN 17005 482 726