General Advice The material shown in this presentation is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice. Whilst all care is taken in the preparation of this material no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by Investors Direct Financial Planning Pty Ltd, or any member or employee of Investors Direct Financial Planning Pty Ltd, or its subsidiaries. Before acting on any of the information contained in this presentation you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation. 0
What we will cover today • Challenge your beliefs & strategy on investing • Confront your personal Utilisation • Empower you to seek advice • Take the “leap of faith”
We have a BIG problem Average Super Balances for Australians* Age Group Low Middle High Average 25-34 $12,000 $59,000 $150,000 $14,000 34-44 $14,000 $60,000 $176,000 $28,000 45-54 $14,500 $63,000 $240,000 $55,000 55-59 $15,000 $66,000 $300,000 $75,000 60-64 $16,500 $70,000 $310,000 $73,000 All $ 13,000 $ 63,000 $ 250,000 $ 40,000 • Average working Australian could face the prospect of a $280,000 shortfall • Expected shortfall for Gen X is $380,0000 – 35 to 50 year olds • The Average Home Loan now lasts for over 40 years • Many do not have a strategy for retirement and are believe the system will do it for them • Most people will now retire with a Home Loan of $170k *www.superreview.com.au
Where to get Good Advice? What has been your Advice experience to date? • Parents? • Internet? • Industry super funds? Inheritanc • Property developers? e • Accountants? • Financial Planners?
Are MY goals being achieved?
Where does my money go?
No one gives me what I need!
Its not What you earn, its What you Keep! • Understand your relationship with money $80k $80k net net $60k Income Income net Surplus Debt Income expense Missed Missed Surplus Opportunity Opportunity Discretionary Discretionary Expenses Expenses Discretionary Expenses Minimum Minimum Minimum Living Living Living Expenses Expenses Expenses
Leveraging can equal higher returns $15k (Rent) “Good Debt” $15k (Interest) $30k (Growth) • 10% Growth • 5% Rent $100k $100k • 7.5% Interest Debt Debt 1 year $100k $100k later $5k (Rent) Debt Debt $15k Profit $10k (Growth) $300k $100k $100k $100k $300k Investment Investment Investment Investment Investment Asset A Asset B Asset A Asset B
Property Price Pattern • Rent: 2-3% • Rent: 3-4% • LVR: 60-80% • LVR: 80-95% • Rent: 4-5% • Rent: 6%+ • LVR: 95% • LVR: 60-80% 30% Median
How lower volatility Property can Accelerate your Wealth creation …… And how not getting it right can erode your cash flow and strangle your freedom
10 20 30 40 50 60 70 80 0 Indonesia Belgium Malaysia Canada Italy Australia We are the lucky country! Labor participation Finland Philippines United States South Korea Hong Kong Chile Ireland Japan Taiwan Portugal South Africa India Turkey Argentina 1000 1200 200 400 600 800 0 1/02/2000 1/11/2000 1/08/2001 Average Weekly Australian Wage in $ 1/05/2002 1/02/2003 1/11/2003 1/08/2004 1/05/2005 1/02/2006 1/11/2006 1/08/2007 1/05/2008 1/02/2009 1/11/2009 1/08/2010 1/05/2011 1/02/2012 1/11/2012 1/08/2013 1/05/2014
Where are Property Prices going? Australian Money Supply vs Property Prices $1,600 $610,000 Money and quasi money (M2) in Australia was last ??? $1,400 measured at $1516 B in 2012, according to the World Bank. $510,000 $1,200 $410,000 $1,000 $800 $310,000 $600 $210,000 $400 $110,000 $200 $0 $10,000 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Average of Median Price for Melbourne, Sydney, Brisbane & Perth (AUD) 8.6% Growth Source: www.econometrics.com Australian Money Supply (AUD$bln)
Money supply drives Prices Sydney $770K Melb $650K Perth $520K Brisb $450K 25 year average Adel $420K Jan 2015 Source: http://www.tradingeconomics.com/australia/money-supply-m3
The main messages to note! 1. Banks objective is to lend as much money as possible to benefit Shareholders, their People and their customers / communities 2. Population growth & consumer confidence are catalysts to sustainable growth and rapid growth, respectively 3. Australians have a high affinity for property which draws on a large percentage of household income 4. Australia is an attractive country to live and for foreign investment 5. Banks lending criteria is not applied equally across the population, its sensitive to postcode level: Focus is on household income 6. Property Investing is a leveraged forced savings plan. To be winners you need (1) average Growth (2) positive cash flow 7. We live in a well designed system – ARE YOU AWARE?
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