Cashflow Matters

How to efficiently manage your cash

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Disclaimer The Macquarie Cash Management Trust ("Trust") is offered by Macquarie

Investment Management Limited ABN 66 002 867 003 ("MIML"). The information contained in this presentation is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. Therefore, before making a decision to invest in the Trust based on this information, you should read the Product Disclosure Statement (PDS) for the Trust and consider whether the investment is appropriate for you in light of your objectives, financial situation and needs. Applications for investment in the Trust can only be made on an application form included in or accompanying the current PDS.

Investments in the Trust are not deposits with or other liabilities of MIML, Macquarie Bank Limited, or any other Macquarie Bank Group company and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank Limited nor any other Macquarie Bank Group company guarantees the performance of the Trust or the repayment of capital from the Trust or any particular rate of return.

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Agenda

Australia’s cashflow quandary - why cashflow matters

Safe Hands – cashflow patterns

Paying yourself first – assets and liabilities

The debt traps – spotting the killers

The service engine – how a CMT fits in

Cashflow management skills needed for success

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Living longer, working shorter

10 20 30 40 50 60 70 80 90

16 65 72Grandad

18 60 78Dad

21 55 83Me

Working years Retirement years Figures are for illustrative purposes only

23 ?My

kids

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Our ageing population

Source: ABS, 2001-2002

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Financial independence =

Building personal cashflow

to replace

employment cashflow

cost of living cashflow

to meet

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Real net national disposable income per capita

Real household final consumption per capita

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In summary

We have… An ageing population Strong economic growth in the past 13 years Real net income growth

Which means… Making money is not our problem

But… Consumption has increased No real wealth is achieved

… Managing cashflow is our problem

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Think like a business

Income Statement

Balance Sheet

ExpensesIncome

Assets Liabilities

How healthy is your cost to income ratio?

vs

vs

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Asset or liability?

Cashflow patterns of assets and liabilities

Liabilities

AssetsAssets pay

income e.g.

shares;

investment

property;

etcLiabilities

cost money

e.g. home;

boat; car;

etc

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Safe hands – handling the cash

Cashflow pattern No.1: Hand to mouth

Income Expenses

LiabilitiesAssets

Salary

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Safe hands – handling the cash

Cashflow pattern No.2: Hand to bank

Income Expenses

LiabilitiesAssets

Salary

Focus on looking

rich

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Safe hands – handling the cash

Cashflow pattern No.3: Handled for growth

Income Expenses

LiabilitiesAssets

Salary

Positive cashflow

management

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Make cashflow an agenda item

1. Understand current cashflow patterns

2. Commit to a cashflow strategy

3. Develop a cashflow system

4. Create a positive cashflow strategy

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The debt rollercoaster

= Mortgage

= Credit cards

+ Mortgage re-draw accounts

=

Consumer marketing:

“You can enjoy the extra freedom that comes with greater spending power…”

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Chart to financial independence

$

Years to financial independence

New car

purchase Home renovations

Financial

independence

Passive

incomeCost of living

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What is needed to change your behaviour?

You need to:

Get financially emotional Think like you are a business Understand your personal cost to income ratio Chart your road to financial independence

Start now Start a budget Understand your assets and liabilities Pay yourselves first Put a system in place to manage your cashflow

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A cash management system

Source: Macquarie Investment Management

Limited 2004

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Implementing the system

Expenses

LiabilitiesAssets

Income Cost of living

Debt

repayments

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Implementing the system

Expenses

Liabilities$300,000

Assets$200,000

$6,000 $3,000

$2,000$1,500

$500

$5,000

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Where is your money?

At-call deposits with Australian Banks, June 1989 - June 2005

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Dep

osit

s (

$ M

illio

n)

$720,660,0

00

Source: www.rba.gov.au/Statistics/Bulletin/B03hist.xls

• Are you happy with your interest, services and fees?

• Are you making the most of your funds?

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Macquarie Cash Management Trust

Safe alternative to the banks – AAAm rated

Highest client service experience – ‘above and beyond the call of duty’

Interest on all your cash

No entry or exit fees on investment transactions

With your permission, your adviser can access your account details

Easy to understand statements

Full internet and phone banking facilities

*fees do apply for some transactions

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We’re always improving…

Although we have the largest and oldest Cash Management Trust in Australia, we’re always looking at ways to improve it….

1998 – 24 hour phone service1999 – 24 hour internet service2000 – the Macquarie Gold Card2001 – BPay online payments2002 – online transacting and other services2003 – automatic downloads to your adviser’s software2004 – online interest and dividend form

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Want further information?

Speak to your adviser

And read this…

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Summary

Working with your adviser to: Establish discipline

Know your cashflow

Understand cashflow patterns of assets

Understand cashflow patterns of liabilities

Define key financial goals

Develop a cashflow management system that works

Track your investment income

Build long-term sustainable results

Macquarie CMT

Smart cash management solutions made

simple