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Feb 17

Start NOW to beat the Taxman

Posted by Peter Marmara-Stewart at Monday, February 17, 2014

Start NOW to beat the Taxman!



Not only are these legal ways to cut your tax bill, they'll give you more money to build your wealth. 

While the taxman is targeting investors hiding assets overseas, there are much less complicated ways to cut your tax bill. Here are 6 legal tax-minimising strategies that you can easily use â€" and they can make a significant difference to your overall wealth creation.

1. Mortgage Offset Account
Have you accumulated some cash and you're not sure about what to do with it? If you have a home loan, putting the extra cash into an offset account can not only reduce the amount of interest payable on the loan, but it will also stop you paying tax on the interest you would otherwise have earned.

2. After-Tax Super Contributions
Using some of your after-tax earnings to contribute into super may make sense for you. The thing to focus on is the environment that your money is invested within. Compared with investing after-tax money in an investment in your own name, investing via super is taxed at a maximum of 15% on earnings and 10% on capital gains, and for those eligible for transition to retirement their money grows in a zero tax environment.

3. Discretionary Family Trust
An effective way to hold investments, a trust is a separate investment structure where assets are controlled by one or more persons (the trustees) on behalf of a group of other persons (the beneficiaries). A discretionary trust allows the trustee to decide who gets the income and capital the trust owns. These can suit someone on the highest tax bracket with family members who are on lower tax rates.

4. Transition to Retirement
If you are over 55, the combination of salary sacrificing pre-tax income into super, and drawing an income from super benefits can be very tax effective. Not only does it get more into your super fund but your cash flow remains the same. The income tax reduction comes about thanks to receiving less salary income (and therefore paying less tax) and more concessionally taxed pension income from your super fund.

5. Investment Bonds
Earnings from an investment bond are excluded from personal income tax because the bond provider pays the tax at 30% internally, leaving you nothing to declare on your tax return. To get the full benefits, you have to leave your money in the bond for 10 years. After this, there is NO tax to pay! It is possible to get access to the money before 10 years, but then there will be some tax payable.

6. An Investment Company 
Setting up a company through which investments are bought is one way of ensuring the tax paid is never more than 30%. Income type assets are best held in a company, and growth style assets are best held by a super fund where the tax on capital gains is just 10%.

To start saving tax immediately, contact the team at Preston Coe & Ring TODAY!

Feb 03

3 Reasons Your Business Needs A Budget Now

Posted by Peter Marmara-Stewart at Monday, February 03, 2014

3 Reasons Your Business Needs A Budget Now

For many, the word 'budget' is about as appealing as the word 'diet'.

It seems to imply what you will go without, rather than what you will achieve.

To a successful business owner, however, the word 'budget' has a very different meaning.

It's more like a map than a diet. It's an outline of where you want to take the business, and what you need to achieve to get there?

Running a business without a budget is like a ship's Captain setting off on a voyage without a map. Sounds ridiculous, doesn't it? Who would do that?!

Yet this is, figuratively speaking, what many business owners do.

Successful business owners, on the other hand, not only set clear targets and budgets each year, they monitor them closely each month, even each week, and adjust them as they go throughout the year.

Here are 3 compelling reasons your business needs a budget, now:

One: If you don't know where you're going, how do you know you're not already there?

If you're not satisfied with how your business is performing, unless you set clear goals for where you want to take it, it's probably as good as it is ever going to get. At best, it will just meander along, subject to the whims and vagaries of the economy and general market conditions.

The good news is that your business doesn't need to meander along.

The first step in charting a clear course for growing and developing your business is objectively measuring 'where it's at' right now.

And the numbers do tell a story.

For some, they act as a wake up call. For others, they just confirm the journey's starting point.

It's paradoxical that a large part of the value in a business budget is not in the numbers themselves. It's in the realisation and acceptance of where you are and where you want to be.

The numbers are just the signposts for the journey.

A factual look at the numbers that describe where your business is right now takes away all the subjectivity, opinions and 'reasons' (often excuses, disguised as reasons).

This is the naked truth.

In fact, it is like standing on the scales, naked, looking at yourself in a full length mirror. That may or may not be a pretty sight!

For your business, these factual numbers are the sales, the variable costs, the margins, the overheads, and, lastly, the profit. After all your work, this is the reward you're left with.

Then comes the first of a series of 'hard questions'...

Are you happy with that profit?

Is it worth it? Or are you dissatisfied? Then ...

What do you want those figures to look like?

Answer those questions, and you've just described where you want to be. Congratulations! You have charted your course, which is the first step to maximising your success.

Two: What's more important to treat? Symptoms or causes?

As you well know, sales just don't happen. Costs don't just drop because you want them to. Sales and costs are a result of other underlying factors. Put another way, they are symptoms of causes.

The business budgeting process quantifies the symptoms, and by asking a series of 'What leads to this number?' questions, it also identifies the underlying causes.

For example, underlying factors contributing to a sales (revenue) figure could include:

the number of calls made,

the number of customers walking through the door,

the percentage of conversions of enquiries or walk-ins to sales, the dollar value of the average transaction, or simply

where your marketing is targeted.

These are all called drivers. The sales figures are simply a result of these drivers. Costs are no different.

For example, the rent paid may be a result of the storage you need for your stock levels. Wages costs may be blowing out as a result of overtime paid but underlying that may be inefficient staff. Or a lack of clear processes. Or both.

So in reality what came first was not the sale or the cost, but their underlying drivers. The budgeting process forces you to name and to quantify these underlying drivers.

That's one of the most valuable aspects of preparing your budget. Not the budget itself, per se, but identifying your business' drivers.

Why?

Because then you can focus on improving them.

That's what will produce the improved results in your business. No looking at last quarter's figures. That's history.

It's more fun to create history. And that is, in essence, what you are doing when you are in your own business. You are captain of your own destiny, and you can steer it in any direction you want.

Note that word ... direction. A key point is to have one.

You will enjoy how effectively the budgeting and planning process will get you crystal clear on your direction.

Three: Budgeting is not about accounting. It's about being accountable.

Once you are clear on the handful of drivers that creates your business' results, the next question is...

What are you going to do about it?

Your budget won't just give you a monthly sales target, for example, it will help you quantify the drivers that will produce the result.

For example, if next month's sales target is $120,000, that end-result figure is not your focus. Not on a day-to-day basis. Knowing the underlying drivers, your focus will instead become, for example:

25 calls per day (Driver No.1)

At 80% conversion rate (Driver No.2), with

Each customer buying an average of $300 worth of products (Driver No. 3).

Now you and your staff have a clear focus and are 100% accountable.

That's good for them, and good for you and your business.

Tip: People in a business want a clear scoreboard and a 'game to play' so they know whether they are winning or not. Research has found that a lack of measurement in a job is demotivating to a staff member. See Patrick Lencioni's books such as '3 Signs of a Miserable Job' for more information on this topic.

Knowing these drivers, and quantifying a target for each ... you can ask questions like:

-      Have the 25 calls been made today?

-      If not, why not? Is the target realistic?

-      Does the team need training?

-      Do they need better telephone equipment or dialling software?

-      Or just more focus?

-      Or guidance on what their task priorities should be?

-      Or a combination of these?

-      Are we being effective and converting 80% of the calls?

-      Again, if not, why not?

You can then decide to improve skills, or systems, or attitude, or all three!

As you can see, the power of the budget is in the process of preparing it, and then the budget itself is a tool to hold you accountable to the measurable indicators you've chosen.

An added layer of accountability is... us.

We work with a number of clients where, on either a monthly or quarterly basis, we act as a sounding board and independent party to ask you the hard questions about the drivers and the results. This focuses your mind, allows you to form a clear Action Plan to improve results, and then increases your chances of success because you know you need to 'report in' to us next time.

It's a brilliant process, that both we and our clients enjoy because it works wonders!

To take more control of your business and its performance, get in touch to make a time to come in and see us. Depending on the size of your business, we might work out that a quarterly process might work best (and be the most feasible, cost-wise), or your business might be at a point where monthly or even weekly guidance would be ideal.

Either way, we'll outline your options and your costs so you know precisely what's involved.

We look forward to helping you chart your course, helping to get a clear direction, and then keeping you and your business on course.

After all, you won't end up at the ideal destination by drifting...

Your next step... Call us on 03 5134 1778 or email us on admin@prestoncoering.com.au to make a time to meet and discuss your options. We'll then outline the costs so you know exactly what lies ahead.

Jan 17

What does FREEDOM mean to you?

Posted by Peter Marmara-Stewart at Friday, January 17, 2014

What does FREEDOM mean to you?

We ask you to take a minute or two and ask yourself - What does FREEDOM mean to ME?


Do you think you'll have enough super to live out your life with absolute financial freedom? Doing what you want, when you want, how you want, as much as you want.

For most, their retirement savings rarely see them through to age 85! But yours can, with Freedom Planning!

So what is Freedom Planning?

Freedom Planning is a one page plan for your future - how much $ you will need, an estimate of how much $ you'll have, and how to help you get to what $ you'll need to ensure you have a beautiful financial future.

How does Freedom Planning work?

It starts with a free, 30 minute coffee and chat with us. Together we will create your one page plan and identify your Freedom Gap - how much $ you need to get, to achieve financial freedom.

Once we've identified your Freedom Gap we can help you to start eliminating that gap with 5 key strategies:

1. Using a Protected Share Investment

Imagine buying shares with no downside risk! Receive all your dividends and capital growth without losing anything if your shares go down in value. Not only do protected share investments help boost your wealth but they can also be tax effective!

2. Using a SMSF

A popular option for investors seeking flexibility and greater control of their superannuation.

We can help you get started with an SMSF and the purchase of an income producing residential property using a borrowing strategy. So not only do you boost your wealth but it makes it last, and you can enjoy the many other advantages of retiring using a SMSF.

3. Debt Optimisation

Sometimes referred to as "Debt Recycling", Debt Optimisation is an adaptable financial strategy that creates wealth over time and improves your debt structure, by reducing your "bad debt", increasing your "good debt" and building an investment portfolio.  All adapted to suit your goals and time horizons.

4. Tax Planning

With effective tax planning every year in the months of March and April, you can legally reduce your tax and boost your wealth. We'll discuss which tax planning strategies will work for you, how and when to get started with them.

5. Increase your Business Value

Using our new Business "On Track" Plan we can set out a 5 year projection of your business value, and an action plan on how you can increase your business value. We will then meet with you every month/quarter to review the plan and ensure you are always on track in boosting the value of your business.

We want you to have a Better Financial Future with Ultimate Freedom! Do You? Don't delay. Call and book your FREE 30 minute chat. The sooner you get started with the right advice, the sooner you will grow your assets to have a beautiful financial future!

Dec 05

The Gift of LIFE for loved Ones this Christmas

Posted by Peter Marmara-Stewart at Thursday, December 05, 2013

The Gift of LIFE for loved Ones this Christmas

It's that time of the year again. We must all begin the increasingly difficult task of buying suitable gifts for our friends and family. However there is a different gift you should seriously consider giving this year. It's not a fun present, nor is it exciting. It's not something you can play with, or wear and it definitely wouldn't be considered a treat. It's a gift that no one wants but everyone NEEDS. So what are we talking about? Life insurance of course.

Every year we search for that perfect gift for a loved one. Something that will show how much we care and appreciate them. What could prove that better than giving someone the gift of security and stability?

Unfortunately the statistics present the sad truth:

-          95% of families do not have adequate levels of insurance1.

-          80% of 25-65 years olds do not believe they are likely to suffer a serious illness in the next 20 years1.

-          When actually each year around 55,000 Australians suffer a heart attack, which equates to one heart attack every 10 minutes2.

 

Firstly, think about your own situation. Do you have people who depend on you financially? If something were to happen to you, would your family struggle to maintain their current lifestyle? If you answered yes to these questions, it's as simple as that - you need to have life insurance. Secondly, do you have a loved one (spouse, adult children, best friend etc.) who needs protection? This year, give them the ultimate gift.

Having an adequate amount of life insurance can help in paying off credit card debts, loans and even the mortgage. It can allow a family to maintain their current level of living and possibly even fund long term goals such as children's school funds, or retirement.

Now we're not saying this is the only gift you should give this year (it might look a little sad with only that under the Christmas tree) however just consider, along with the other gifts, giving a present that may not be appreciated at the time, but one day could be critical during a hard time.

You look after your family now so this is the perfect gift idea.

It's important to consult a professional when considering life insurance as it is imperative that you are insured accurately depending on your current situation and future needs.

Knowing that you will want to know more; just click HERE, provide your details and we will be in contact with you.

1 The Lifewise/NATSEM Underinsurance Report February 2010

2 The Heart Foundation

Nov 28

3 Reasons Personal Budgeting Is Brilliant, Not Boring!

Posted by Peter Marmara-Stewart at Thursday, November 28, 2013

3 Reasons Personal Budgeting Is Brilliant, Not Boring!

If a business owner said to you that they run their business without a budget, what would you think? You'd think they were incompetent. Or perhaps lazy? Or both?

But what do most families do?

When you think about it, a family is actually a mini business. There is income, there are expenses and there is, hopefully, something left over to invest and to enjoy.

So why don't most families operate to a budget?

After all, a personal budget helps you to see your financial direction and helps you stay (or get back!) on track. It's a great comfort.

One reason some people don't put together a budget is a feeling of overwhelm, of being too busy, of feeling like life is too complex to keep track of all that.

Well the good news is we can handhold you through the process and make it easy for you.

But before we look at the 'how' aspects, let's consider 3 more reasons why a personal budget is such an important tool to help you achieve your financial goals and dreams.

1. Most of your money is already spoken for long before you get it

The money you earn has already been promised to keep the electricity on, make the loan repayments and pay for the insurance. Most of what many people think of as budgeting is really honouring the commitments you have already have.

Now since we are all honest people and plan to pay these bills, the first step is to track these bills and see what is left over for your day-to-day living.

2. Your day-to-day living money is spread all over the place

Some of your day-to-day living money is in the bank. Some is in your purse or wallet. Some is with your partner or children if you have them.

You need a simple system that allows you to track day-to-day expenses such as fuel for your car, shopping and your discretionary spending expenses.

We suggest you don't attempt to keep track of every cent of your day-to-day living money. It's not worth the effort for the benefit you'd get out of that level of detail.

Instead, you need to identify your main day-to-day expenses and make allowance for all other minor day-to-day expenses as a total expense.

Here's a key: You need a system that is so easy to use that you keep using it. You can track these day-to-day expenses by entering them into a spreadsheet, or better yet, use a tool like Pocketbook that can automatically pull in bank feeds to save you a lot of data entry.

3. The Number 1 reason people give up on their budgets is that they don't have the right attitude

It's ALL in the attitude!

Have you ever attempted to budget and given up in frustration? What is the reason your budgeting attempt failed? What will make you stick to it?

Think about this

One of the top reasons-if not the top reason-so many people give up at budgeting is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it?

It's like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge every now and then and yet still achieve your goals.

To increase your chances of success, work on your attitude first.

Many people refuse to budget because of budgeting's negative connotation. If you're one of them, try thinking of it as a 'spending plan' instead of a 'budget'. Once you've attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Don't give up!

The cold hard reality

Let's face it. Money is a tool that enables you to reach your goals in life. But the cold hard reality is that until you know where your money goes, you can't make conscious decisions about how to use this tool effectively.

A budget (or spending plan!) shows you exactly where your money goes and provides a clear plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a tertiary education, high quality health care, travel, or whatever your particular goals and dreams happen to be.

And that's exciting.

Whatever YOU decide you want to save for and achieve, you can. With the right attitude, a focus and a (spending!) plan.

Avoid This Pitfall

There are several universal budgeting concepts that every successful budget will include, but one of the most important features of a successful budget is for it to be easy to use and suitable for your needs.

Don't try to use a generic, complex, one-size-fits-all budget. A simpler approach makes it easier to stay committed. If you stick with a realistic, effective budget long enough, the rewards will keep you motivated. In the meantime, do whatever it takes to keep yourself going.

The 3 steps for effective personal budgeting (spending planning!) are: 1. Build a Budget, 2. Track Income and Spending, and 3. Compare Budget to Actual. Once you start budgeting with a positive attitude, you will see the difference a budget or spending plan can make in your life. Your next step Call us on 03 5134 1778 or email us on admin@prestoncoering.com.au to make a time to meet. We'd love to discuss this with you and help you to get on track towards achieving your financial goals.

Nov 19

How much for a comfortable lifestyle

Posted by Peter Marmara-Stewart at Tuesday, November 19, 2013

Client Alert! November 2013

How much for a Comfortable Lifestyle? Tips for your Financial Future

 

Consider these numbers around superannuation and your future:

For a comfortable lifestyle, a couple will require about a $510,000 super balance at the start of retirement.

A single retiree will require about a $430,000 super balance at the start of retirement.

How are you tracking?

And what does it take to end up with a super balance of that size, if relying solely on the 9.25% compulsory superannuation contributions?

Assuming 30 years of 9.25% contributions, a wage earner on $50,000 per annum is likely to have a super balance at retirement of $220,000.

Someone earning twice that amount, $100,000, will still only end up with $435,000.

That's what we call 'a very material gap' between the required super balance and the likely super balance.

And what that really means, is a HUGE DIFFERENCE in lifestyle for the retiree.

For a couple on a single wage of about $100,000, this gap will be $75,000 and their likely super balance will be about 85% of the required balance.

Clearly, there are three options:

1.   Increase their contribution rate above 9.25% for the couple's working life (say about 30 years); or

2.   The couple significantly downsizes their retirement lifestyle expectations; or

3.   The couple will have to extend their working life. 

A useful reference for planning your level of retirement savings

To know whether your retirement savings will give you a comfortable or a modest standard of living, refer to the ASFA Retirement Standard.

This benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.

You'll see on that page that the ASFA Retirement Standard describes a 'Modest retirement lifestyle' as, "Better than the Age Pension, but still only able to afford fairly basic activities."

It describes a 'Comfortable retirement lifestyle' as "Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel."

ASFA calculates that a couple living in QLD would need to receive $56,163 per year for comfortable lifestyle, and $32,463 per year for a modest lifestyle.

Although many of us have been brought up to see 'being modest' as a good thing, this certainly doesn't apply to your retirement lifestyle!

 

How to get your super (and likely retirement lifestyle) on track...

To us, your superannuation is one aspect of your LifePlan. Superannuation is great, and you should take advantage of the tax advantages it offers.

Contact us to make a time to meet with us to discuss what's involved in us documenting for you a clear LifePlan.

Your LifePlan will cover not just building your wealth, but also protecting your assets, managing your cash flow, tracking your expenditure and making sure that in 10 years' time, you are where you want to be financially and lifestyle-wise.

 

Every client we have developed a LifePlan for has loved it. They tell us it gives them comfort and clarity to know they have a clear, achievable, documented plan, developed by a team that not only considers investment and financial planning aspects, but also taxation and accounting aspects. That's the benefit of working with Preston Coe & Ring, because we address 'the big picture' of your financial life, which is something that neither an accountant nor a financial planner can do in isolation.

The quality of your lifestyle in retirement is too precious to leave it to chance, and as you can see above, relying solely on compulsory superannuation is a recipe for a meagre lifestyle in retirement.


FREE LifePlan Consultation  Book NOW!

To assist you to get your Super on track, contact us TODAY on (03) 5134 1778 for a FREE 30 minute consultation. We can clearly show you, using our exclusive LifePlan Gap Analysis, your "big picture" and set out an action plan to help you on your way to achieving your retirement lifestyle!

Don't delay. The sooner you get started with the right advice, the sooner you will grow your assets to have a beautiful financial future!

Nov 19

The Power of a Zero-Sum Budget

Posted by Peter Marmara-Stewart at Tuesday, November 19, 2013

The Power of a Zero-Sum Budget

In the midst of the many articles on budgeting systems and strategies, a less publicised but equally important technique is the Zero-Sum Budget. This strategy involves "spending" every dollar that you make. However you are not 'spending' your money in the usual sense of the word - " in this situation it refers to allocating your entire earnings into appropriate categories. The following steps demonstrate how you can apply this kind of budgeting:

Step 1: Determine your Single or Combined Total Salary

For most salaried workers who are paid on a monthly or fortnightly basis, this step is simple. Others may have to put in a little more effort if pay is based on an hourly rate or particularly irregular. Try to work out your income as a monthly amount - " you can then use the strategy of paying for next month's bills using this month's income. By always being "one month ahead" you will find your budget much easier to plan and keep track of.

Step 2: Itemise Your Bills

Now that you know your total amount of money coming in, your next step is to work out how much you need to spend next month for bills, groceries, everyday expenditures etc. Don't forget those things that might be yearly or quarterly expenses. Try and include everything you can think of as the more accurate it is, the better your budgeting will be. See the list below as an example:

-          Mortgage: $1,426                                                      -     Fuel/Miscellaneous: $200

-          Electricity: $200 (estimate)                                      -     Mobile Phone: $55

-          Gas: $25 (estimate)                                                    -     Internet: $35

-          Groceries: $500                                                         -     Life insurance: $77.31 (paid quarterly)

-          Daycare: $500                                                            -     Rubbish: $56.25 (paid quarterly)

-          Health Insurance: $377

Total: $3451.56

Step 3: Compare and Contrast

Now that you have listed your income and expenses, you will notice how much is left over. How is this money currently being used? You may realise that you are wasting it on things you don't really need. Or you may be gradually saving it. Regardless of what you decide to do with this money, the point is you now have the knowledge of what is left and can therefore make an informed decision on what to do with it.

i.e if a couple had a net income of $7000 for the month, a zero-sum budget may look like:

-          Mortgage: $1426                                                         -     Mobile Phone: $55

-          Electricity: $200 (estimate)                                        -     Health Insurance: $377

-          Gas: $25 (estimate)                                                     -     Life insurance: $77.31 (paid quarterly)

-          Groceries: $500                                                           -     Rubbish: $56.25 (paid quarterly)

-          Daycare: $500                                                              -     Short-term savings: $1500

-          Internet: $35                                                                -     Long-term savings: $1500

-          Fuel/Miscellaneous: $200                                         -     Holiday Fund: $548.44

Total: $7000.00

 

This strategy may also enlighten you if it uncovers that you are actually spending every cent you earn. In this case, you might need to start considering the things you could live without. Some possible cuts may be pay TV, eating out, or excessive entertainment spending. Remember, everyone's lifestyles and priorities will be different, it is up to you how you allocate your money.

Step 4: Make a choice and stick to it

Once you know your excess cash flow, you can decide what you would like to do with that extra money. You might decide to pay off some debts, save, invest or put it towards a financial goal you have. The only trick is - if you decide to allocate a certain amount of money somewhere, stick to your decision, put it there straight away and leave it be.

Step 5: Keep on top of your spending

It's important to check in every now and then throughout the month to make sure you are not spending over your self-allocated limit. Try to stick to the motto that "when it's gone, it's gone". It may be painful in the first few months, but it can be one of the best ways to create good habits.

Step 6: Make Adjustments

It can take a few months before your Zero-Sum Budget is working efficiently. Don't worry about having to make adjustments - it's all part of the budgeting process. As with anything, you will get better at noticing where you may need to allocate some more funds to, or where you can easily shave a few dollars off here and there.

Don't Forget

One last (but very important) part of your Zero-Sum Budget is an emergency fund. This is crucial in circumstances such as an unplanned medical emergency or car issue, and will allow a bit of leeway so that your whole month's plan won't have to be abandoned. Just remember that when you have tapped into these funds, try to replace them again as soon as possible.

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