Investments – build your wealth and grow your retirement savingsSpeaker’s name Title/departmentMonth, 2014

Agenda

What is investing and how it worksInvestment structuresInvestment vehicles Asset classes Things to consider when investingInvestment strategiesNext stepsQuestions

What is investing and how it works

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What is investing and how it works• Investing is the process of getting money to work for you. It is

a powerful way to grow your wealth.• People invest for different reasons i.e. saving for a big holiday,

to fund children’s education, repay the home loan faster or increase their retirement nest egg.

• The key to successful investing is to identify your investment goals and the time frame over which you want to invest. Investment goal Timeframe Suitable InvestmentShort termi.e. new car

1-3 years Cash, fixed interest and money market securities

Medium termi.e. home deposit

3-5 years Emphasis on fixed interest with some cash and growth assets (such as property and shares)

Long termi.e. retirement

5+ years Emphasis on growth assets (such as property and shares)with some access to cash

Investment vehicles

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Investment vehicles

• Investment vehicles are simply the different structures in which you hold your investments. – Deposit products– Property trusts– Insurance bonds– Managed funds– Listed Australian shares– Listed shares on international stock exchange– Wrap accounts

Asset classes

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Asset classes

• There are a number of different asset classes in which you can invest.

• Each asset class carries with it a different level of risk and return and may perform differently at different times of the market cycle.

• It is important to spread your investment across a range of asset classes, known as diversification, the higher returns that you receive from one asset class may offset low returns from another asset class.

• These include but are not limited to:– International shares– Australian shares– Property– Australian fixed interest– International fixed interest– Cash

Things to consider when investing

Things to consider when investing

Key investment principles:• Risk and return – different investments carry different levels

of risk, you need to work out which you are most comfortable with.

• Volatility – relates to the tendency for the value of the investment to fluctuate over time

• Capital liquidity – how easily funds can be sold and on what terms

• Diversification – spreading investment money over asset classes, sectors within asset classes, regions or investment styles.

• Dollar cost averaging – investing a set amount of money on a regular basis over a long period of time.

• Buying quality assets and setting realistic timeframes11

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Things to consider when investing

• The different types of risks associated with investing:– Market– Investment specific– Inflation– Interest rate – Diversification– Currency– Credit– Liquidity– Legislative

• Income or gain from investments• Tax on investment income/earnings

Investment strategies

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Investment strategies

1. Pre-pay investment loan interest and reduce this year’s tax

2. Invest inside super to save tax 3. Use super to manage tax4. Sell a small business tax-effectively

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Investment strategies

1. Pre-pay investment loan interest and reduce this year’s tax

• The interest you pay on a geared investment is generally tax-deductible in the year it falls due.

• However, you may be able to prepay up to 12 months’ interest on the loan and bring forward your entitlement to the tax deduction.

• Prepaying interest may allow you to:– reduce your taxable income this financial year– lock in the interest rate you pay for the following year

• Note: the prepayment must be made before 30 June and you cannot ‘claw back’ any interest payments if the account is closed or repaid.

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Investment Strategies

2. Invest inside super to save tax• Investments held in super funds are taxed at 15% or less, rather than the

marginal tax rate of up to 46.5% (including Medicare levy).• < age 65 - Non-concessional contributions are limited to $150,000 a year, or

you can bring forward two years’ worth of contributions by contributing currently up to $450,000.

• > aged 65 – Non-concessional contributions are limited to $150,000 a year, and you can’t make a super contribution unless you satisfy the work test.

$150,000 $180,000 $180,000 $180,000

30 June 2013

30 June 2014

30 June 2015

30 June 2016

$450,000 $0 $0 $540,000 $0

30 June 2017

$180,000

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Investment strategies

3. Use super to manage tax• If you’re self-employed and make personal contributions to

super, you may be able to claim the contribution as a tax deduction.

• This can be an effective strategy as the deduction is a good way to offset assessable income you may have made this financial year.

• For example, if you’ve sold an asset (like an investment property) during the year and have made a significant capital gain, the tax deduction from your super contribution can reduce personal income tax that would have been payable on that capital gain.

• What’s more, investment returns in complying super funds are concessionally taxed at a maximum of 15% – as opposed to your marginal tax rate outside super of up to 46.5% (including the Medicare levy).

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Investment strategies

4. Sell a small business tax-effectively• Subject to meeting the basic requirements, small business owners can take

advantage of the Government’s small business concessions to reduce or even extinguish any capital gains tax (CGT) realised from the sale of a business or business asset.

• If the business asset was held for 15 years or more, and the owner is either over 55 and retiring or permanently incapacitated at the time the asset is sold:– any capital gains could be disregarded; plus– up to $1,315,000 of any sale proceeds could be contributed into super

without counting towards the concessional or non-concessional contributions caps.

• If the business asset was held for less than 15 years the owner may avail of another 50% per cent reduction on their capital gain in addition to the 50% CGT discount and disregard up to $500,000 of the remaining capital gain if certain conditions are met.

• If you’re considering this strategy, it’s important to seek professional financial, legal and tax advice specific to your circumstances.

Next steps

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Next steps

• Consider your short and long term goals• Determine your investment risk profile • Speak to a Financial Planner to discuss your goals and financial

circumstances

QUESTIONS

Disclaimer

Disclaimer

This information was prepared by Asgard Capital Management Limited ABN 009 279 592, AFSL 240695 (Asgard) and is current as at March 2014. A Financial Services Guide (FSG) is available for all Asgard accounts and services and can be obtained by calling 1800 998 185.  Material contained in this presentation is an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.This presentation contains general information only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. All case studies and examples used in this presentation are for illustrative purposes only and nothing in this presentation should be construed as an indication or prediction of future performance or results.Any taxation position described in this publication should be used as a guide only and is not tax advice. You should consult a registered tax agent for specific tax advice on your circumstances. As the rules associated with the super and pension regimes are complex and subject to change and as the opportunities and effects differ based on your personal circumstances, you should seek personalised advice from a financial adviser before making any financial decision in relation to any matters discussed in this presentation.

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