Help for Investors Directly By Adam Carmody The catalyst to any successful investment for YOU is to have a proven guidance system. With over a decade experience in working in some of Australia’s leading financial planning firms, we have taken what we learned from our experiences, and from what clients had successfully done and built a framework for financial planning that everyone we meet agrees with. Here with Bill Zheng at Investors Direct Financial Planning our team is built for servicing tangible asset investors. We launched the business at our recent seminars that covered Global Trends for 2010-12 and some essential elements in the future of your wealth creation. It was here we spoke of our framework that is intuitive and easy to implement, and now we want to give you a sample from which we know you can really benefit. Our business aim is to help those who think and invest like us. We know the answers to our own types of queries were rarely being handled by the traditional financial advisory firms we had seen and worked in. Issues like how to discover what to do with equity in property; what are suitable retirement options for a property investor; how to make the most out of each property we own; what true diversification is – this is more than just paper assets such as managed funds; and showing ways that income goals can be met from a mortgaged property portfolio. There are 138 issues handled in our advice process, each one aimed at capitalizing on your opportunities. To demonstrate some value we offer, the following is a taste of some tools we know are really needed to ensure you get through in good shape. We share them with you here on one proviso, that you apply them. Do you like paying tax? - Buy your investments in structures that save you tax. The first thing to look at before buying any investment is to check the tax implications now and in future of where you own the investment. This is often overlooked and if missed can be so costly, we have often gulped at the size of the tuition bills people have paid. For example, Jenny and Jack bought an investment property in 1990 for $200,000 in joint names after receiving an inheritance, in the following twenty years this grew in value to $773,000 (earning 7% per annum capital growth). They sold this, after which they realized that because they were both working at the time they each were up for $143,000 each in realized capital gains, this leading to tax bill of around $132,000 - at the highest tax rate of 46.5% for the couple. A little advice at the start and they may have put the money into super and bought property in there, at which point they would have enjoyed the capital gain potentially tax free – if they were in pension when they sold. Who do you ask for help? – A toolbox for self management is important. I attended a soccer match with a friend about a year ago, he was hungry and not wanting to queue up during the half time break. He ran down to the canteen to get some food. To his dismay while he was gone he missed the only two goals scored in the match. The lesson he learned was clear. Staying seated and accepting it takes time to achieve a goal is wise. Despite the little time saved in the food queue he missed the reason he attended the game.  Taking this example to your investment experience helps to see the impulses we may have had in the past and how looking at our broad plan before acting ensures we make better decisions free from impulse.  Bachelor of Barbeque for investing? – do you know it’s the beer goggles talking. There are many opinion leaders on investing, particularly after a few ales. Separating the wheat from the chaff is not always easy. A great leader once said, ‘if it isn’t written it isn’t true’ and by applying this we can avoid the influence of others in our investment decisions. My motto is to verify information that comes my way, form a viewpoint of my own, before any conclusions impede my wealth creation. Personally being a financial planner among friends, we often hear great stories at barbeques about investing. Like the story of the German Troup of pensioners who kidnapped their financial planner for a few days during the financial crisis, or tips on what shares to buy, or what markets are about to do. These are all ‘great stories’ about someone else’s viewpoint. Forming our own viewpoint is so valuable in protecting from potentially damaging influences. After all, knowledge applied is power. The greatest weapon in wealth creation – spending less than you earn. The most amazing thing about a person’s ability to grow wealth is found in someone’s daily handling of money. Ask yourself this, do you know how much you earn and spend exactly? – If the answer was a ball park figure, we suggest you could benefit from some help. Often we let our money go astray, rather than putting good controls in on it. This is especially true for those with teenage kids, who forever have their hands out. Isn’t it funny how there is often no measure of this. The key to wealth lies here, this over and above most any investment selection. I have seen a solid money management system work wonders, helping people achieve their wildest dreams. We have spent our lives creating a system for spending, and how much time is spent on management of that. Learning a good habit with money takes discipline. As mentors for thousands on their money over the past decade, without good skill in this area applied, those without a significant income can be challenged to a life of worry about how to meet the next bill.  We run courses on how to ensure good money management is used in your home, and when applied this can change your life. A policy for life – a rule book for investment. Managing investments with confidence requires a sound approach built on good research. Each investment decision requires goal setting, ongoing management and a warning or guidance system for what we do if investments misbehave. A clear investment policy, one that outlines the do’s and don’ts of investing now and in the future is essential. Creating this policy should be part of your plan and written goal, a plan that covers if you will meet your objectives, how you will get there and the rules to follow along the way.  Travel with a road map The best way to get what you want is to name it out. The clearer and more concise your statement, the more likely it is to occur. ‘We want a happy client base, who knows with confidence that with our help they are always working towards their goals’. We hope you can find the above useful, as we have during our journey to date in financial planning. Smart money management is the greatest tool in the creation of freedoms. If you were offered great tools, fool proof policy and guidance in an area which you needed to achieve in would you use it? This article was written by Adam Carmody CFP, Director, Investors Direct Financial Planning.