The most important and basic financial plan starts with the age old art of saving money. Most people save what is left after they have covered all of their other priorities. Smart people include a fixed amount of savings as a committed cost, they save first, then spend what is left.
At Nixon Financial Services we can design, implement and monitor a savings plan to suit every type of investor for periods of 1 to 40 years.
An old adage says, “people who don't save seem to be the people who work for those that did.”
There are many people, who for a number of reasons, cannot afford to take any risk with their investment portfolio. In the past these people would have chosen life insurance capital guaranteed investments but sadly these are no longer generally available. In their place there has been the development of a range of products that have , as a basic element, a guarantee that at some fixed point in time (usually at maturity) the value of the investment will not be less than the amount originally invested.
Of course just to get your money back is not the total aim of this type of investment but there are quite a number with this key feature.
At NFS we can help you to find a suitable guaranteed investment for your needs.
Gearing is simply the process of borrowing to increase the level of your initial investment. The amount borrowed is a fixed commitment that must be repaid. The lender does not share in any profits and does not carry any losses.
The proper use of a Gearing Plan can enhance the returns on investment in a rising market. On the other hand, gearing can accelerate losses in a falling market.
Gearing plans can be used for direct property as well as for listed investments such as shares and ETFs. However, gearing plans for listed investments are different and are referred to as margin loans. Usually the lender will set a 'Loan-to-Value' (LVR) ratio, which is the ratio at which the value of the loan cannot exceed. For instance, a $20,000 portfolio includes a margin loan of $10,000 and the LVR was set at 70% by the lender. This means that the loan value cannot exceed the limit of 70% of the value of the entire portfolio. In this example, the loan represents only 50% ($10,000) of the total portfolio and therefore the LVR is below 70%.
If market volatility causes the value of the portfolio to fall to $14,000 (representing a 30% fall), then the loan of $10,000 would now represent 71.43% of the total value of the portfolio and therefore would exceed the LVR of 70%, this would then trigger a margin call. When a margin call is triggered the borrower must either sell down assets within the portfolio to bring the loan to value ratio back to a level below 70% or alternatively, the borrower can provide additional capital in order to bring the loan to value ratio back within accepted limits.
This represents one of the biggest risks with margin loans; that you may be forced to sell down assets at depressed prices in order to satisfy margin requirements or inject extra capital (that you may not have).
One of the advantages of a geared investment plan is that it will generally generate tax deductions for the interest paid on the borrowed amount.
Plans are available using a starting lump sum, a regular monthly contribution or a bit of both.
Other forms of gearing are also available for us to offer you if they suit your needs. There are some `pre-packaged' geared investment products and some special types of share warrants that can provide an investor with the benefits of gearing without the risk of a margin call.
Bob Nixon is qualified to assist you with these types of investment plan.
After first determining your Investor Risk Profile we are able to assist investors to plan a strategy and spread their investments over a carefully selected and monitored portfolio. We use direct investments such as shares and fixed interest facilities along with managed funds, all dependant on your needs and your risk profile.
Some people want to invest to produce income, others are concerned about tax, some want to maximise growth and reduce the focus on income.
You may be building a portfolio to produce future income, to fund education costs for children or grandchildren or to create an inheritance for some-one you care for.
There are some people that have missed out on the benefits enjoyed by many others from being inside the superannuation “club”. The people that have missed out include self-employed people that were not able to provide much via superannuation towards their retirement needs but have amassed non-superannuation savings along the way. There are others that have received bequests long after they were able to transfer that money into the superannuation environment.
These people need to provide an income stream for themselves in addition to, or instead of Centrelink benefits.
Their needs are special with certainty of cashflow, tax and other issues high on their priorities.
Many of our clients enjoy the inclusion of direct share investments in their portfolios. Shares can be included in most of the modern Masterfunds or Wrap Accounts in either a superannuation or non-superannuation environment. Choice is usually limited to shares in the ASX 300 and the inclusion of a share in a client portfolio requires a supporting recommendation from a research house or share broker on the Sentry approved panel of brokers.
Of course direct investments like shares and fixed interest instruments can be held outside the management facilities of a Masterfund or Wrap too.
A masterfund or wrap account is a management tool that is commonly used to collect together for convenience, reporting, tax and ease of management by financial advisers. Whilst there is a charge for the use of these facilities there are also cost savings. The use of a masterfund usually allows for an investor to access managed funds on a wholesale basis with consequent cost savings. Management time efficiencies are also considerable and this too contributes to their cost/benefit equation.
Advisers at NFS use a number of key masterfunds and wrap accounts as part of their service to clients.