FINANCIAL PLANNING

Future Planning

Wealth and financial security don’t just happen.

We take a big picture approach to your short term and long term needs. As Thomas Edison said “Good fortune happens when opportunity meets preparation”.

A financial strategy is never static, so your strategy will be adapted as needed to suit your lifestyle and accommodate whatever unexpected developments life throws your way.

Shartru Wealth considers the ultimate measure of successful financial planning to be the achievement of your financial and lifestyle objectives. So we take a holistic view of your overall financial situation and goals. From the very beginning we’ll help you to identify your objectives and lifestyle goals by asking you to consider questions like:

    • What are your important financial and lifestyle priorities?
    • Are you taking advantage of all the current taxation strategies available to you?
    • Do you need more income with less tax?
    • How confident are you that you are adequately providing for your retirement?
    • What are the investment options that you can utilise to help you create wealth?
    • Are your loans structured to allow for flexibility and subsequent financial growth?
    • Is there any other area of your financial affairs that you wish to review?

Financial Growth

Remember when petrol was $0.32 per litre , then $0.70 per litre, then $1.00 per litre and is now $1.50 per litre? It’s not just petrol that has increased, most things we buy increase over time with inflation – bread, milk, paddle pops.

Given the recent “correction” in the share market and the inevitable media “scare tactics” that follow, we felt that the graphic illustration below provided an apt reminder of what we are trying to achieve as your financial planners; creating and protecting your wealth.

The graph below shows two options for investing $100,000 in 1993 for 19 years. One option was investing the funds in term deposits and the other investing in the share market.

Initially you would have been receiving approximately $5,000 interest from the term deposits, and slightly less from the shares.

The income generated by each investment diverges with the share income climbing dramatically, as company profits increase, compared to the term deposit whose income remains relatively stable. Over time the capital value of the shares will fluctuate (such as is happening now) while the term deposit remains static.

Australian Equities vs Term Deposits

At the end of 19 years, the value of the share investment is now over $200,000 whereas the term deposit has remained static. But more importantly the income generated from the share investments is now approximately $8,000 per annum whereas the income from the term deposit is only $4,000 per annum, which would not offset the effect of inflation (rising prices) over the 19 years.

Which income stream would YOU prefer? In fact, which income stream do you need?

Over the long term, it is access to this income stream that will provide you with financial security.

Australian Equities vs Term Deposits 2

If you purchased that income stream in 1982 for $80,000 or $120,000, the income stream would still be the same and would have provided you with an adequate return. The moral of the story is that when assets are attractively priced we don’t need to get too cute in trying to pick highs and lows (which is impossible), as over time the difference becomes negligible.