Are You Missing Out?

Are You Missing Out?

Are you Missing Out?

The Power of One Percent

It is easy to overlook the importance of just a 1% increase in the return that we receive from an investment. This is especially the case if we have a relatively small investment that is inaccessible for a number of years.

These amounts can be, for example, superannuation for a young person or an investment for our young grandchildren for when they reach adulthood.

The following table illustrates how just a 1% increase in return can make a significant difference to the end result.

As advisers, we often come across investors who have some smaller amounts of money that are not readily accessible and because there is no urgency, they have not taken action to make the investment as effective as it can be.

As the above table illustrates, if you do not have an appropriate investment strategy, over time, that 1% that you miss out on today can add up to be very SIGNIFICANT tomorrow.

If you would like more information on investing, please contact us at wealthadvisors@plus1group.com.au or call 03 5833 3000.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au

Who wants to make an easy $100,000?

Who wants to make an easy $100,000?

Who wants to make an easy $100,000?

(aka The Compound Factor)

The good news is.. you can. If this interests you please read on.

Most of us have heard people saying things such as:

  • We spend what we get
  • If it comes out of my pay, I don’t miss it
  • I pay it on the first of each month and it’s done

One of the most powerful ways of creating wealth is by regularly investing each month. It can be quite boring but regular saving works. It really does.

To illustrate this, we will look at two ordinary people:

Let’s look at Mr Today and Mr Tomorrow. 

Mr Today starts investing $200 per month right now in 2019 for 10 years then he stops and leaves the investment to accumulate for a further 15 years. 

Mr Tomorrow delays investing for 10 years until 2029 and then invests $200 per month for the next 15 years.

With an investment return of 8.00% per annum, the results after 25 years would be:

  Mr Today Mr Tomorrow
Total Amount Invested $24,000 $36,000
Value after 25 Years $114,702 $67,772

 

The moral of the story is… Start Today, Not Tomorrow

Even though Mr Tomorrow invested much more than Mr Today, because he didn’t start straight away, after 25 years, he is still a long way behind.

To catch up to Mr Today and have the same amount in 25 years, Mr Tomorrow would need to invest over $60,000 or over $4,000 each month.

How did Mr Today end up with $114,702? Mr Today saved $50 per week, each week for ten years, then let the magic of compounding interest do the rest. It’s deadly dull but as we said it works. Could you do the same thing?

Like a lot of things in life, there is always a cost in putting something off until tomorrow.

If you would like more information on investing, please contact us at wealthadvisors@plus1group.com.au or call 03 5833 3000.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au

Key Man Insurance

Key Man Insurance

“Key Man” Insurance

Let’s play the ‘what if’ game.

What if something happened to you or a key member of your organisation? Would your business continue to operate? Could you still generate revenue? Would you know what to do or how to operate that special piece of machinery?

It takes years to build a successful business – but just seconds to end one

Keyman Insurance is an insurance policy taken out by your business to protect critically important personnel in the event of accident, illness or death. As an example cover could include;

  • The sole proprietor or CEO of a business
  • A senior business partner with important networking connections
  • A high achieving salesperson who brings in significant revenue
  • A technician or designer with specific knowledge that impacts on operational performance

There are two types of policies available. Revenue or Capital protection.

To calculate the level of cover & which type of policy is best, consider the following financial costs or requirements;

  • Cost of paying off loans, especially those personally guaranteed by the key person.
  • Rebuilding your income and revenue.
  • Buying ownership of the company from the key person’s inheritors.
  • Recruiting and training a new staff member or hiring a temporary replacement.
  • Replacing lost goodwill and maintaining business capital.
  • Paying benefits to the key persons beneficiaries.

Any other fees, lost clients, customers or revenue, damage to your business and other expenses.

Other considerations

  • Your Key man insurance policy can cover disability or temporary inability to work, or death only.
  • If the business has a buy/sell agreement in place. If a key person dies, this agreement automatically lets other partners acquire their portion of the business ownership. Some policies may require a buy/sell agreement, but most do not.
  • There are some exclusions with policies only paying benefits in certain circumstances. For example, they may not pay for self-inflicted injuries or certain accidents.

For further information or to receive a no obligation FREE quote, please contact our financial planning team on 03 5833 3000 or email wealthadvisors@plus1group.com.au

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au

How is my Dividend Income Stream Going?

How is my Dividend Income Stream Going?

How is my Dividend Income Stream Going?

When we invest in shares we are essentially investing so we will receive a Growing Income Stream through dividends received from the companies we invest in.

At times of considerable volatility, we tend to put our attention to the movements in share prices, especially when the volatility movement is on the downside (naturally). Less focus is on what I originally invested for. Obviously, a growing dividend income stream and hopefully some capital growth when I eventually sell the shares to realise the gain.

At times of volatility (like now) we must reflect on those companies we invested in and ask ourselves the question:

ARE THOSE COMPANIES STILL PRODUCING PROFITS,  SO I CAN CONTINUE TO GET THE GROWING INCOME STREAM FOR THE REASON I ORIGINALLY INVESTED IN THEM?

Short answer most of the time is – YES. The reason I invested in these companies has not changed and I am still receiving a growing income stream by way of dividends.

It is essentially the market that is moving (downwards) not the fundamentals of the company or companies I am invested in. It is a bit like if you were Sleeping Beauty and went to sleep for say 12 months, and therefore was not aware of what the markets are doing. Then effectively nothing has changed and your 2 six monthly dividends have still been paid when you wake up.

As a pure illustration please see the schedule below which highlights the above principles. CBA has been chosen not for any particular reason but a share most interested parties would be somewhat aware of. We are just stressing the historical evidence of how:

IN COMPANIES CONTINUING TO PRODUCE PROFITS, ON AVERAGE THE GROWING INCOME STREAM CONTINUES DESPITE THE VOLATILITY.

In the schedule, the green shaded area highlights the extreme share price changes and also shows how the dividend yield held up above 5% per annum (a lot better than term deposits) plus any franking credits.

The 2 blue shaded areas highlight that some 12 years later the dividends received totalled the original purchase price.  In addition, there is still considerable capital price appreciation.

The yellow shaded area highlights the excellent dividend yields despite the share price being all over the place (the volatility) over the 12 years.
We trust that this article and the below figures helps to give some understanding of the volatility “affects” and adds some comfort in times of uncertainty.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au

Redundancy Planning

Redundancy Planning

Redundancy Planning

As an employee there is a word none of us ideally wish to hear;

REDUNDANCY

A “swear” word that sometimes brings with it:

  • Anxiousness.
  • Concerns about the future.
  • A lot of complexities on the financial front to contend with.
  • An unknown “where do I go from here attitude” especially for those persons ceasing employment after a long time with a firm.

Redundancy can also bring with it a time of:

  • A chance for a most wanted change.
  • Opportunities for lifestyle changes.
  • A move away from what may have been “unhappy” employment
  • Do some things that I always wanted to do.

Obviously, there are a lot of financial issues and hence decisions revolving around:

  • What are the taxation implications of my various payments?
  • Should I remove some debt?
  • What about that dream holiday?
  • Is this a time to semi retire for me?
  • Should I go into business for myself?
  • What about my superannuation situation?
  • Should I buy an investment property
  • What are my Centrelink entitlements?

The government recognises some of the dramatic outcomes of redundancy for individuals and has considerable tax concessions in place for persons made redundant. 

Apart from those persons electing to retire then the reassessment of my future working life and will this be vastly different to what I have done, is at the forefront of decisions to be made.

The considerations of where to now can easily be centred on the financial matters rather than personal lifestyle changes. For this reason, we are strong believers in individuals not rushing in to decisions and to explore the full range of lifestyle and financial alternatives and seek appropriate advice and  guidance.

On the non- financial front for those persons wishing to continue to work there is a good old saying:
“MY NEW FULL TIME JOB IS TO INITIALLY LOOK FOR A NEW JOB”

This can be quite daunting for persons who have not had to attend job interviews and the like for some  time.
On the financial side of things essentially most redundancies come with:

  • A tax-free redundancy amount depending on years of service and company policy/awards.
  • A taxable redundancy amount generally applicable to higher income earners.
  • Concessionally taxed annual leave and/or long service leave.
  • Possible access to superannuation particularly for older persons nearing retirement.

If you are fortunate to have been advised of your pending redundancy well in advance of the actual date of leaving the firm there are also various strategies to assist with planning ahead for taxation impacts, liquidity, lifestyle continuation whilst seeking new employment, improved Centrelink entitlements etc.

Moreover, we always urge individuals to explore all their options whether that be type of future work/employment, financial decisions and lifestyle changes.

At Plus 1 Group, we are available to assist individuals facing redundancy with a view to lessening some of the concerns at invariably difficult and uncertain times for individuals and their families.

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au

Understanding Business Expense Insurance

Understanding Business Expense Insurance

Understanding Business Expenses Insurance

When you have worked hard to build up your Small Business, you want to make sure it is as protected as possible. Unlike grand corporations, a small business relies on you – the owner’s contribution to keep the business ticking over. What would happen if you were so ill or injured you could no longer work? In this case, Business Expenses Insurance safe guards your business against ruin.

In a nutshell Business Expense Insurance covers a whole range of expenses your business must pay out regularly. It does not cover estimated profits. It covers the costs your business spends on a daily basis and can include:

  • Rent
  • Salaries and other related costs (e.g., payroll tax, super contributions)  for non-income generating employees of your  business
  • Equipment maintenance costs
  • Bills, including electricity, gas, cleaning, telephone and internet etc.
  • Loan repayments
  • Insurance premiums and security  expenses
  • Net costs associated with employing a locum (replacement worker to cover your duties)
  • Leases on cars, machinery and other  equipment
  • Accounting fees
  • Auditing fees
  • Membership fees and subscriptions to professional bodies.
  • Advertising, postage, printing and stationary.

Business Expenses Insurance doesn’t typically cover:

  • The salaries and wages of temporary  employees
  • Income taxes
  • Furniture costs
  • Inventory costs

Do I need it?

It is common for small businesses to experience a drop in profit when the business owner or manager isn’t around to keep up the momentum. But the world doesn’t stop when you’re out of action; while your revenue decreases, your business must still cover overhead expenses. Your Business Expenses Insurance policy safeguards your business against your absence at work.

While Business Expenses Insurance isn’t mandatory it is worth considering if you are:

  1. A small business
  2. A sole trader
  3. A partnership with five or less   partners
  4. A business that relies on services provided to generate cash flow (such as professionals or consultants)

It’s up to you to decide whether you want Business Expenses Insurance. But the guarantee of having enough financial resources to sustain your business in times of  need is a powerful  thing.

It’s worth remembering Business Expenses Insurance is a business expense, which means the premiums are tax-deductible. Of course, since benefit payments are considered income, they can be subject to tax.

How does it compare to Income Protection Insurance?

Business Expenses Insurance and Income Protection Insurance cover different things.

If you become disabled or otherwise unable to work, income protection insurance will usually cover 75% of your monthly income for the claim period. The purchase of Income Protection is to cover your everyday living costs. This type of cover, covers you personally as a worker.

If you become disabled or otherwise unable to run your business, business expenses insurance provides the benefits to cover the expenses your business must pay as a business owner.

Becoming disabled while having both income protection and business expenses insurance could result in benefits that cover both your business and your personal expenses.

Example

Open Hours

Monday to Friday
8:00am to 5:00pm

Closed Public Holidays

If you need to get us documents quickly, access remote support, or the MYOB Portal click the button above.

Contact Us

27 Welsford Street
Shepparton, VIC 3630

T: (03) 5833 3000
F: (03) 5831 2988
E: info@plus1group.com.au