There are often a lot of steps in your financial journey before you start answering the question of ‘which investment?’ Are you aware, for example, of how to grow your super if you’re a stay at home parent? Or the different ways you can save for your first home? At Nucleus Wealth we’re here to help you along your entire journey to achieving financial peace of mind.
This article has been designed to highlight some of the ways we’ve helped our clients on their journeys to financial peace of mind in the past.
The First Homebuyer
Kirra is 25 years old, single, works as a plumber with a pre-tax annual salary of $75K/year. She has $30K in Super and is finding it difficult to save money for a home deposit. She finds for every dollar she saves, her potential new home goes up $10 – leaving her further and further behind her dream home purchase. Her bank account savings are earning her almost nothing. She wants to know if there’s a way to earn more than inflation; to keep her savings growth at a higher pace than the increase in house prices.
How Nucleus Wealth helped Kirra:
Kirra viewed Nucleus Wealth’s Portfolios and saw that the Tactical Income was the most conservative portfolio – giving low volatility in returns, which has delivered an average annual return greater than both current interest rates on bank deposits and inflation. Kirra also felt that because she was so young, she could comfortably weather higher levels of volatility over the long run in her Super. So she considered allocating that to the Tactical Growth portfolio.
Kirra then booked a free appointment with Christopher, one of Nucleus Wealth’s financial advisers, to discuss the possibility of rolling over her Super to Nucleus Wealth and opening a separate Individual account for her home deposit savings.
Christopher brought Kirra’s attention to his article covering “Superannuation Strategies for End of Financial Year (EOFY)”. The article mentions the First Home Super Saver Scheme, which allows First Homebuyers to make tax-deductible contributions into superannuation, and have money managed in a tax-efficient Super environment, until she is ready to buy a home (conditions apply). There was even a link to the ATO website where it was explained in greater detail for Kirra to assess whether the scheme would be in her best interest.
Kirra went ahead and opened a Super account with Nucleus Wealth, and entered into an agreement for her employer to make additional contributions to the account on behalf of the First Home Super Saver Scheme. The Super was invested in the Tactical Growth fund, but the First Home Super Saver Scheme portion was invested in Tactical Income.
As a result Kirra saved $4,875 ($15,000 x 32.5%) in income tax by putting $15,000 into her super as part of her deposit for a new home each year. But, her super account treated it as a concessional contribution, and taxed it at 15% (i.e. $15,000 x 15% = $2,250). The net impact ($4,875 – $2,250) left her $2,625 better off by saving $15,000 for her first home in super, each year . So after 2 years, on $30,000, she is ahead by $5,250 due to tax alone.
The Stay at Home Parent
Eric is 42 years old, has 3 kids, and owns a family home with his wife, Lucia. He owns and runs a successful beauty salon he started 2 years ago, after being a full-time father for the past 15 years. He is comfortable now (giving himself a salary of $150,000/year), but is worried about his retirement savings; with a Super balance of around $50,000. He wants to know the best way to increase his retirement savings. He is wondering if he should buy property outside of Super, or contribute more to his Super, or maybe a combination of both. He already has his Super at Nucleus Wealth, so he calls Nucleus Wealth to speak to a financial adviser and get some information about the options that may be available to him.
How Nucleus Wealth helped Eric:
Tim, a senior financial adviser at Nucleus Wealth, brings Eric’s attention to our recommended “Superannuation Strategies for End of Financial Year (EOFY)”, which summarises different ways to increase his Super balance.
The article goes through many options for Eric, which he was not aware of earlier. He wishes he had known about the Government Co-Contribution and Spouse Super Contribution Tax Offset when he was a full-time dad and not working at the salon.
He sees he can make tax-deductible super contributions and/or salary sacrificed super top-ups (both Concessional Contributions) to a maximum of $25,000 (including his employer’s Super Guarantee contributions), reducing his taxable income and increasing his Super balance.
The Market Watcher
Andre is a 40-year-old Accountant, who has been looking closely at the market for years. He was blindsided by the 3-week sharemarket crash in March 2020, and is kicking himself that he didn’t see the signs of a pending crash earlier to avoid losses. To make things worse, he panicked and sold out of his market positions during the crash, locking in losses, and was hesitant to jump back in – as he saw no reason for the market to continue to go up.
Now, one year down the road, equity markets have bounced back globally, and Andre is still holding cash. He is hesitant to get invested because even though he recognises that the economic situation is more certain now than it was 9 months ago (especially since November 2020), he questions: Is the market now overvalued?
How Nucleus Wealth helped Andre:
Andre listened to Nucleus Wealth podcasts/webinars and read the monthly performance reports, to get an understanding of Nucleus Wealth’s current view towards the market and investing, then booked a free call with a Nucleus Wealth financial adviser, Christopher, to discuss his concerns.
Christopher suggested ways to get invested, without getting a large exposure to the equity market right away. This allowed Andre to choose a path to get invested and participate in potential further upside movements in share prices while limiting his downside risk. The key was determining a risk level that Andre felt comfortable with, given Andre’s concern there could potentially be another correction on the horizon or that he may otherwise pick to jump in at the top of what Andre thought was an overvalued market.
The options Christopher discussed with Andre included:
- Staggering his investment entry, for example, investing ⅓ over each of the next 3 months
- Choosing a portfolio that is more conservative during the period in which Andre is anxious about the equity market (e.g. Tactical Income – had a 10% exposure to Australian equity and a 10% exposure to International shares) and moving to Tactical Growth (which at this time had a 45% exposure to Australian shares and a 37% exposure to International shares) once Andre feels comfortable with a larger exposure to equity.
- Utilising the free “Limited Advice” path in the Nucleus Wealth onboarding portal, where Andre would answer 12 multiple choice questions so Nucleus Wealth could assess his tolerance towards investment risk, and suggest a portfolio split from these responses, for him to consider
- A combination of the above 3.
- Or simply waiting until Andre felt comfortable to get invested with a sharemarket exposure
Knowing the options, Andre decided to utilise the “Limited Advice” path. He agreed with the suggested portfolio split, which was heavily weighted in Cash and Bonds, but still had an allocation to shares.
As you can see, our team is here to help you achieve financial peace of mind whatever your situation is. If you’ve got a question you’d like answered you can book in for a complimentary session with one of our financial advisers, or send us an email at firstname.lastname@example.org.
The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Nucleus Wealth Management is a Corporate Authorised Representative of Nucleus Advice Pty Ltd – AFSL 515796.