Investing in your forties can be challenging as often this will be both your peak earning and expenditure period for those with a mortgage and children. At this period in life, those with mortgages may be applying great chunks of their cash flow towards meeting debt repayments where their tax bills are also significant and consequential on their finances. This is the period where careers, family and lifestyle commitments overshadow investors and some tend to ignore their most efficient resources such as superannuation and any equity tied up in homes.

Our observations suggest that planning and investing in your forties is the best chance any investor can have to turn things around for a better long term. At this stage, investors have about two decades to implement an investment strategy to give themselves and their portfolios sufficient time to evolve. If having a clear written plan based on your objectives and goals can be ideal, this is the period it may be needed the most. 

Talk to our professionals for an objective financial health assessment. We help our investors understand what they can do to improve their overall financial situation. We devise strategies focused on improving cash flow, debt reduction and tax minimisation. Reviewing super funds at 40 is of high importance as investors need to know whether they are on the right track or should be changing direction with their superannuation savings. Our professional services and advisers can provide you comfort in knowing that you are on track.

ANIG Wealth Management is a licensee and wealth management firm and advisor group focused on managing and growing the wealth of non-institutional investors and retail clients.


You have spent a lifetime working to secure your financial future. ANIG WM’s strategic investing, debt reduction, and tax mitigation solutions can help protect and grow your available resources (superannuation and non-super assets) and provide the confidence and peace of mind you seek from your advisers and wealth management firm. We share a common goal with all our advisers and through our personalised and comprehensive investment and wealth management solutions, we are your single source of solution to all your retirement planning questions. 


Our Point of Difference?

 

Holistic – With wealth comes complexity, so our holistic approach to financial advice and investing begins from understanding your set immediate and long-term objectives. Our processes are to ensure we are strategising to deal with your unique and ever-evolving circumstances for your immediate and long-term peace of mind.

 

Direct Ownership – Owning our AFS license allows us to independently think about our strategies and clients’ wellbeing without any institutional agendas. We can reduce/cut unnecessary costs, and our clients/advisers are well-positioned to be investing direct using their preferred asset classes of equities, fixed interest, and direct property-based investments. 

 

Customisation – We have a flexible approach to portfolio construction. Your portfolios are customized to your set security level and unique investment risk profile to provide you the confidence you seek and peace of mind. 

 

Accessibility – You will be under the management of your adviser/AR/CAR. You will have direct access to your adviser/AR/CAR and also your investment managers. We provide 24/7 access to your portfolio, so you can always be evaluating our performance. 

 

Tax-effectiveness – We focus on the after-tax returns to stem or reduce your cash outflows and promote wealth preservation. With investors opened to sound advice, we are comfortable using investment vehicles like Superannuation, SMAs, SMSF, Family Trust, and other tax-effective vehicles to reduce the tax impact on your investment returns and future capital gains

 

Exclusivity – Given we are a non-aligned firm, we can apply a diverse range of investment solutions, and you will have access to exclusive investment opportunities that would otherwise not be available to you in a product-based market.

The amount of cash flow an investor can put towards a mortgage repayment depends on your salary. The 28/36 rule is a general rule for calculating the amount of debt an individual or household should take on. The 28/36 percent rule is to guide and prevent investors from taking on higher debts that could cause them financial stress. 

 

The rule states that families or individual’s total household expenses should not exceed over 28% of their gross monthly income. Also, 36% is the maximum you can spend on servicing total household debts, including housing and other loans such as cars, personal loans and, credit card debts. Most lenders apply these rules in assessing investors borrowing capacity on the assumption that anything outside these parameters can be difficult to sustain by an individual or a household. 

 

Mortgage stress is when your mortgage repayment is over 30% of your pre-taxed income. Therefore if your mortgage repayments are over and above 28% of your gross monthly income, then you may be heading into a mortgage stress territory. 

To focus on paying down a mortgage quicker with strategies, we first should understand your cash flow and budget and have a clear indication of where your money goes. This exercise can reveal to homeowners’ insights about their finances that can be managed and used to create some surpluses that can be reapplied to the mortgage or investing. Investors should be discriminating between bad debt and good debt and should try not to use home equity for non-capital and non-income producing purposes.

Where we identify resources possible to invest, we can align them with your goals and objectives and work out a strategy to create a second or third income stream to create relief. All surpluses from the income we can generate from investments can be a combination of shares, properties and fixed interest which can help to pay off your mortgage quicker.

It is a great feeling to receive a super statement showing their 1-year performance record. Most investors are accustomed to paying attention to their annual performance records. It goes with the statement that my super fund did 12% or 15% this year. Performance is always a good indicator but when last did you track your funds’ performance and how it compares to others on a 3 to 5 years basis or 5 to 10 years basis? 

 

Having your super reviewed by an adviser will ensure you know how it has been performing, how much it has been costing you, the insurances you have in place, and whether or not their investment and insurance solutions tie in with your personal goals and objectives. Having answers to these can help you save time, money and also make the necessary adjustment earlier.

 

ANIG WM’s services include superannuation review and analysis. Our work shows you how your fund compares to its peers in performance, cost, insurance structures, investment options, and if they fit your set long-term goals. Note, the purpose of superannuation is to help fund your retirement. Knowing you are on the right track in your 40s is crucial to your long-term peace of mind. 


Where a change of direction is necessary, we provide investors with sufficient information and adequate rationale to make an informed decision. The investment options available to you can be unlimited. You can decide to retain what you have, or join a competitive fund, or establish a Separately Managed Account (SMA) or a self-managed super fund (SMSF) where appropriate. 

This part can rub you hard if you’ve been investing in any form but have never before completed a risk profile questionnaire. 

 

The planning and understanding of risk are the key to successful investing. Knowing your risk tolerance can help you cope well with falls in the value of your investment. Some of the factors that may influence your risk tolerance are your age, earning capacity, financial goals, health, and also capacity to recover from financial loss. 

 

Ask yourself: how did you feel when you woke up and found a significant drop in the value of your investment due to the impact of the COVID 19 pandemic? Risks that can affect the value of your investment include market risk, liquidity risk, inflation risk, timing risk, interest rate risk, currency risk, sector risk, concentration risk, gearing risk, credit risk, and others. 

 

The truth is most of these risks can be managed or even controlled with the right investment strategies and vehicles. However, the vast majority of investors have acquired assets on a general advice basis without knowing their risk profile or attitude towards investment risk. A good example is with super investing where most investors joined by default upon their employer’s or a friend’s recommendation. 

 

A risk profile questionnaire looks at your attitude to investing, your tolerance to investment risk, and how you may react in different markets and economic conditions. ANIG WM can help you complete one and also explain to you how its outcome can influence your investment outcomes Investors new to risk profile can click here and refer to ASIC Moneysmart contributions on the topic. 

That depends if the investor likes property and considers the lower tax treatment associated with property investing through super to be appropriate. 

 

Superannuation is a tax-effective environment where the rental income can be taxed up to 15%. For a property held for over 12 months, capital gains tax (CGT) is capped at 10%. Also, when an asset is held until age 60, the rental income can be tax-free. Most importantly, there is no CGT payable on the sale of the asset when the investor turns 60 years. These are the general reasons property in super can be attractive. 

 

To reduce the risk of having all your funds concentrated in a single asset, we provided equities advice to diversify your overall portfolio. 

 

To investors only interested in equities and other investment, we leverage off our extensive access to over 20,000 shares and ETFs across 23 global exchanges inclusive the ASX, managed portfolios, managed funds, and investment managers when providing them with investment solutions.  

 

The opportunities can be quite extensive, and our clients/investors are always advised based on their attitude towards investment risk, their set circumstances, lifestyle and financial goals and other factors we may identify in your advice process. 

 

Talk to ANIG WM and ask how we can help.

Salary sacrifice is a form of concessional contribution additional to the standard 9.5% employer super guarantee contribution made on your behalf by your employer upon the member’s instruction. Salary sacrificing is generally the first tool to consider when thinking to boost your super savings. There are caps on the concessional contributions you can make each financial year as there is a penalty tax to pay when you go over. 

 

Note, there are only two types of superannuation contributions. They are the concessional contribution (CC) that currently is capped at $25,000 and a non-concessional contribution (NCC) that is capped per individual at $100,000 in a financial year or up to $300,000 for three years when you trigger the bring-forward rule.  

 

You now know concessional contributions are your pre-taxed contributions made into superannuation. Non-concessional contributions (NCC) are the after-tax contributions made into super. Most NCC contributions are lump-sum payments made from an inheritance, capital gains from a sale of a property, contributions to spouse super fund and others. Age affects your NCC cap and, ANIG WM can help you navigate this part. 


Borrowing in super for investment in other terms can be considered the unofficial form of contributionANIG WM think of the loan as another form of contribution as it is a form of capital injection. For instance, if the maximum you can put into super in a form of CC is $25,000 and NCC is $300,000 per investor, what should we call a loan amount of $500,000 worth of borrowing through super?  If we consider a $25,000 each CC contribution by a couple, it will take 10 years for a couple and 20 years for an investor to contribute $500,000 into super. What the loan allows investors to do is to bring forward their consumption to today.

A self-managed super fund (SMSF) is a tax vehicle that allows investors to invest in a tax-effective environment. Investors have total control of their superannuation assets as the vehicle allows you to select appropriate investments to suit your set circumstances by ensuring you have exposure to the major asset classes of fixed interest, shares, and property-based investment. In the right situation, an SMSF allows you to hold direct real estate investment. 

 

Investors can run a pension within an SMSF structure, making the vehicle quite suitable as a long-term financial planning tool. SMSF can help reduce the amount of tax paid by the fund by investing in assets that pay franked dividends and offsetting the attached imputation credits against the fund’s taxation liability.  

 

An SMSF is a lower tax vehicle that operates on a fixed cost basis. The highest tax applied to an SMSF is 15%. Capital gains tax (CGT) is capped at 10% for assets held over 12 months. With about 20 years’ timeframe, an SMSF can be an efficient wealth creation tool for over 40 investors. The services of a qualified adviser can play a key role in guiding you to understand what the vehicle is, how that could potentially benefit you, and also your trustee/s obligation and ensure your SMSF remains compliant. Talk to an ANIG WM SMSF Auditor and see how we can help you.

Our observation is most investors or retirees will need to be generating about 60% to 70% of their pre-retirement income to be able to live a comfortable lifestyle in retirement. This means for a couple or single investor on a combined or individual after-tax income of $120,000 will need to be generating between $72,000 – $84,000 of passive income tax-free. 

ANIG WM assumes the investor is no longer paying for a mortgage that can take up to 28% of income and also your children may no longer be dependent as child cost could consume up to 30% of income or more for those who may sent their kids to private schools.

This is because if you are used to earning a certain standard of income over 20 to 35 years of your working life, individuals get accustomed to certain habits and lifestyles that can be hard to break. So, if you are planning to maintain a similar lifestyle in retirement and to slowly dial down as you age then we believe the 60% to 70% is more reasonable. 

Over 40 investors with super may be aware of their insurance coverage within their super funds. By default, it is common for super funds to come with life/death insurance and total and permanent disability (TPD) covers. The only problem with this is that default covers never take into account the insured circumstances. Technically they do not reflect anything about your financial or lifestyle position. It is a don’t ask-don’t care process where an individual’s lifestyle, debt-position, income needs, family composition and expenses get sidelined. 


Insurance should be a function of total debt levels and household income. So if by default a Life/TPD cover offer you $300,000 Life/TPD but your mortgage is over $700,000 excluding major lifestyle expenses, ask how you see yourself covering the difference in a life or disability event after you’ve receiving a payout for the $300,000?

 

With income protection (IP), some employers offer two (2) years of benefit period coverage through superannuation for their employees. It is usual to expect income protection to cover up to 75% of current income and sometimes an additional 9.5% to cover for superannuation. Again, the question is, in the event of a claim where the life insured meets payout and is unable to return to work after the two (2) years payout period, how do you support yourself or your family for the remaining years without an income?


Investors in their 40s are technically the most vulnerable as this is often the period of their highest earnings, higher debts and lifestyle and family expenses. Ensuring you have adequate levels of protection is a must-do for your peace of mind. ANIG WM can help you with your insurance review and also help you structure them in the most cost and tax-effective manner. Note there are four (4) personal protection (life/death, TPD, income protection and trauma/crisis cover). We will educate you about them and how they each may or may not apply to your set circumstances.

The ATO estimates as at 30 June 2019 that there was $20.8 billion in lost and unclaimed super across Australia.


Also, ASIC estimates there is around $1 billion of lost and unclaimed money to be claimed from bank accounts, shares, investments, and life insurance policies they are holding and waiting to be claimed by the owners. 


These are funds forgotten or being overlooked by its owners or beneficiaries and likely are incurring fees. It can be due to any reason, such as death, sickness or simply the owners are time poor. ANIG WM can help you with this process and help you find, review, and consolidate these funds to help support your wealth creation objectives.


Click the link for more information on: Lost and unclaimed super by postcode

Passing away without a Will (die intestate) is a situation that can cause more grief to most families at an already difficult time. A will can ensure you have your affairs structured that your wishes are met and assets are distributed to the right beneficiaries. To die intestate can potentially cause an inappropriate or disproportionate distribution of assets. The services of an estate planning solicitor are of high importance. Wills must be comprehensive. As such, the ideal situation is not found in an online, 10 minutes to complete, ‘will- kit’ Will. In most cases, such Wills do not necessarily deal with the complications associated with estate planning and very often are inappropriate. 

A binding nomination is an important part of superannuation as super does not form part of an estate. To ensure that the right person receives the superannuation benefits you need to ensure a binding nomination is set up.

As your personal circumstances change over time, it is advisable to have wills updated every 5 to 10 years. For a binding nomination, it is appropriate to have them updated every three years. 

It takes two to pilot this right. Tap into our resources and expertise and experience the ANIG  WM difference.   
Over 40 Investing