Over 40 Investing - Develop an investing plan for over 40 investing

Investing in your forties can be challenging, as it is often a period of peak earning and expenditure, with substantial debt repayments and taxes. To give yourself and your portfolio the best chance, it is important to have a written plan based on your objectives and goals.

Our professional financial planners can provide a financial health assessment, helping you understand how to improve your financial situation. ANIG WM advisors can advise on tax-effective investment strategies, cash flow and debt management to ensure you are on the right track.

Families Investing

Medical Professionals

Business Owners

Retirement Planners

SMSF Investors

First-time Investors

Our Over 40 Investors Have Many Questions When It Comes To Wealth Creation, Tax Mitigation And Retirement & TTR Planning. Here Are The Top FAQs We Have Encountered:

The 28/36 rule is a guideline to help investors ensure they can afford to take on debt. The rule states that no more than 28% of an individual’s or household’s gross monthly income should be spent on total household expenses.

At most, 36% should be spent on servicing total household debts, including housing and other loans. Mortgage stress is when mortgage repayments are over 30% of pre-taxed income. It is important to ensure that mortgage repayments stay within the 28/36 rule to prevent financial stress.

A risk profile is an assessment of an individual’s willingness and ability to take risks. It is used to determine an individual’s risk tolerance, which is the amount of risk they are willing to take to achieve their financial goals. Financial advisors use risk profiles to help clients make informed decisions about their investments.

Over the past 20 years, an individual who started working full-time at age 20 and earned an average salary of $120,000 per year until age 40 has earned a total of $2,400,000. How this money was spent depends on their lifestyle and financial decisions.

How much have you paid in tax?

This suggests that an individual would pay approximately $34,000 in taxes annually, which would amount to $680,000 over 20 years.

How much went into mortgage and interest repayment?

Assuming you own a home acquired in 2000 with a mortgage at an average 5% interest rate, and you focused on paying it off in 20 years with a principal, and interest repayment term, the examples illustrated in the table can be applied.

Purchase Price

Original Loan

Rate

Mortgage Cost – 20 Yrs

Interest Paid – 20 Yrs

$300,000

$240,000

5%

$380,000

$140,000

$400,000

$300,000

5%

$475,000

$175,000

$760,000

$600,000

5%

$950,000

$350,000

How much went into superannuation savings?

Assuming a contribution rate of 9.5% for the last 20 years, you would have accumulated $136,800. This is only if you solely relied on your employer’s contribution.

How much was left for lifestyle, family, children’s education, and other expenses?

After purchasing a house, there was an estimated $1,203,200, $1,108,200 or $633,200 available for lifestyle, family, children’s education, and other expenses. This equates to approximately $60,160, $55,410 or $31,660 spent per year over the past 20 years.

If you have been too busy with career and family responsibilities to focus on your financial wellbeing, your superannuation balance may be below $300,000. We should look into using your assets and implement specific investment strategies to maximise them. This could help you avoid relying on the Age Pension, which should be a last resort.

Over forty investors with superannuation may be aware of the insurance coverage their funds provide, such as Life and Total and Permanent Disability (TPD) coverage. However, these default covers do not consider individual circumstances, such as lifestyle, debt, income needs, family composition and expenses. Thus, the process does not assume any personal information or preferences. 

Insurance should be based on an individual’s total debt and income. If their default life and TPD cover is $300,000, but their mortgage exceeds $700,000, plus other major lifestyle expenses, the difference should be considered in the event of death or disability. 

Some employers offer income protection through superannuation for two years, covering up to 75% of the insured person’s current income, including their super-guaranteed contribution. However, after two years, the life insured may not have sufficient income to support themselves or their family. 

Investors in their 40s are particularly vulnerable, as this is often the period of their highest earnings, debts, and lifestyle and family expenses. Having adequate levels of personal protection (life/death, TPD, income protection, and trauma/crisis cover) is essential. ANIG WM specialist risk advisers can educate you on how these protection policies may or may not apply to your individual circumstances, giving you greater peace of mind.

 

SMSFs are often used by investors looking for flexible and unlimited investment options. They are for investors wanting their investment preferences considered and included in their superannuation investment decisions. Most investors employ the services of a qualified SMSF financial adviser to assist. They do so knowing their set goals and objectives will be considered, which is a service an SMSF-accredited ANIG WM adviser can provide their clients.

If you have been thinking of taking ownership of your superannuation savings and having a say in the how, where, and type of assets your funds get invested in, then an SMSF may be a tool to consider.

We understand investors have different goals, and we provide tailored advice and strategies to help you achieve them.

SMSF investors can invest directly in almost all assets. This includes but is not limited to assets such as listed and unlisted shares, fixed interest, ETSs, Managed Funds, and residential and commercial properties.

There are several benefits to investing directly with an SMSF, including tax benefits and unlimited investment options. However, the services of a qualified SMSF adviser can help make a significant difference.

Our team of specialist Superannuation and SMSF advisers look forward to finding out how we can help you with your superannuation and retirement planning needs. We provide extensive opportunities to invest in all major asset classes, tax management, insurance and estate planning services to ensure you are well-protected and your wealth is transferred to the next generation. 

Link to ‘Self-managed super fund quarterly statistical report – March 2019’

Our services for business owners and medical professionals are focused on connecting you to what you love and helping you turn that into wealth.

Our specialist advisers, SME and SMSF accredited advisors can help you balance your objectives with solutions to benefit your business, practice, yourself, and your family. We provide advice on tax planning, insurance, superannuation, investing, and wealth management, as well as helping you assess your eligibility for the Small Business Entity Concession if you’re looking to sell your practice or business.

ANIG WM advisers can provide ongoing advice and support services in administering your self-managed super fund (SMSF).

Our SMSF-accredited advisers can provide full-service assistance to new SMSF trustees with their education about the SMSF vehicle and establishing a new SMSF. Most importantly, we guide clients through their administrative duties, their documentation and processing of financial information, annual audit and the preparation and lodgement of the SMSF tax returns with the ATO.

No, there is no set age to retire or be financially secure in Australia. Retirement age and financial security levels vary from person to person depending on their level of income, savings, investments and other factors.

Retirement is when people can choose their lifestyle and use their investments, including superannuation savings, to cover their living expenses. To access these funds, investors must meet the condition of release. Generally, this occurs when they reach their preservation age, normally over 60. Before retirement, individuals should assess their debt situation and if they can become debt free by retirement. Additionally, they should evaluate if they can generate enough passive income from their investments.

By default, an SMSF does not come with life/TPD insurance. Unlike retail or industry super funds, an SMSF does not automatically provide life or total and permanent disability insurance. You must arrange insurance coverage for yourself and any other fund members if you have an SMSF.

Investing in an SMSF requires a thorough understanding of the risks, time, resources, and compliance obligations associated with setting up and running the fund.

Compared to traditional retail and industry superannuation funds, trustees of an SMSF are ultimately responsible for the fund’s operation and associated duties and responsibilities.

Our SMSF-accredited advisers cater to retail investors who want to meet their trustee duties and obligations. Depending on the investor’s preference, the process can be as educational, interactive, or passive as running a traditional super fund.

Investing in property through superannuation can be a great option for investors looking to diversify their portfolios and take advantage of lower taxes on rental income and capital gains.

Generally, an investor could consider SMSF property investment when there is sufficient cash flow, liquidity and the SMSF has a long-term investment approach.

Therefore, if an investor wishes to pay minimal or no taxes on rental income or capital gains from their property investments until retirement, investing in property within their superannuation fund is a great solution. This will allow them to benefit from the tax advantages that superannuation offers and also ensure that their investments are secure and managed professionally.

Sometimes, redrawing from home equity and contributing the money into super can be a good idea. This strategy involves redrawing from home equity and injecting the capital as a non-concessional contribution (NCC) to super. However, the interest on the loan amount drawn from the home and contributed into super is not tax-deductible at the marginal tax rate. Therefore, cash flow is essential to ensure the strategy is successful.

This strategy may only be suitable if there is sufficient surplus cash flow. The loan should be paid off within the strategic investment timeline if this strategy is pursued. The primary benefit of this strategy is that the investment is made in a lower tax environment (max 15%), with CGT capped at 10%. However, the investor loses out on tax credits on interest payments.

ANIG WM is the home of professional Financial Planners and SMSF-accredited Advisers. With our personalised approach, you can trust that your financial future is in good hands.

Navigate your future with our Financial Advisers & SMSF-Accredited Advisers

Experience our expertise in SMSF advisory and investment services by making us your specialist SMSF advisers. We offer unlimited access to our knowledge and professional SMSF service solutions. We can also assess an SMSF borrowing strategy with you, helping you determine your borrowing capacity and advise if it is a viable solution for you.
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