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High Level Financial Advice “North West Wealth Management builds dedicated relationships with your family and business by providing high quality, tailored.

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Presentation on theme: "High Level Financial Advice “North West Wealth Management builds dedicated relationships with your family and business by providing high quality, tailored."— Presentation transcript:

1 High Level Financial Advice “North West Wealth Management builds dedicated relationships with your family and business by providing high quality, tailored financial advice you can trust“

2 High Level Financial Advice Welcome and thank you – I know everyone is Busy! Timeframes and format Derek and Kirrily Blomfield – NSW Farmers of the Year Please write down questions and we will answer at the end Why do we do this? Introduction

3 High Level Financial Advice Why are we here? To learn about tax effective off-farm investment strategies to build and protect your wealth Structuring your investments for tax effect, asset protection and estate planning Credit markets update and why you should treat interest like any other cost of production

4 High Level Financial Advice The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. North West Wealth Management Pty Ltd ACN ATF North West Wealth Management Unit Trust ABN trading as North West Wealth Management Authorised Representative of Apogee Financial Planning Limited ABN is an Australian Financial Services Licensee and has its registered office at Miller Street North Sydney NSW A member of the National group of companies. From time to time James Smith, members of the National group of companies, associated employees or agents may have an interest in or receive pecuniary and non pecuniary benefits from the financial products and services mentioned herein. JAMES SMITH (BBus, DFP) PO Box 1904 Tamworth NSW 2340 P F Website

5 High Level Financial Advice 1.Spread your portfolio risk 2.Allow for retirement of business owners 3.Allow for payout of siblings 4.Set aside funds for ‘rainy day’ Need to get money off-farm - WHY?

6 High Level Financial Advice Asset Mix

7 High Level Financial Advice Superannuation is the most tax effective environment Invest in equities, bonds, residential or commercial property Gearing is allowable but under very strict criteria SMSF or retail Need to get money off-farm – HOW?

8 High Level Financial Advice Tax effective in both accumulation and pension Asset protection TTR Tax free Income & Capital Gain Benefits of Investing in Super

9 High Level Financial Advice Nearly 3,000 SMSFs established every month Now over 534,176 1 SMSFs in Australia Largest superannuation sector, holding 31% of all assets Average assets $992,000 per fund 8,735 LRBA’s which has quadrupled in 2 years 1.All figures are from ATO website and most current 30/6/2014 SMSF Statistics

10 High Level Financial Advice Why are SMSFs so popular? Borrow to buy property Borrowing to buy property in SMSF can be more tax- effective than in own name But can also be more complex

11 High Level Financial Advice SelfCompanySuper Tax Rate25-46%30%15-zero% Funds Invested $1 million Rate of Return 6% $60,000 Less Tax($21,000)($18,000)($9,000) Net funds$39,000$42,000$51,000 Compound 10 6% $583,894$628,809$763,554 Maximum diff$180k Tax Rate Effects

12 High Level Financial Advice https://www.facebook.com/video.php?v= &pnref=story

13 High Level Financial Advice Start with $100,000 Add $1,500 per month Earnings 7% per annum 20 year timeframe Investment will be worth $1.185 mill in 20 years time – total contributions $460k If you leave it for 5 years – only worth $760k with contributions of $370k Quick Example – Start Now!

14 High Level Financial Advice Here’s a really simple savings plan that anyone should be able to follow and end up with $1378 more socked away by the end of the year. It starts with saving just $1 the first week.

15 High Level Financial Advice Assumes $5k per annum on 1/1 each year with all income reinvested. Compares age 25 with age 35

16 High Level Financial Advice Slide 16 Term Deposits can appear attractive in the short term (Income Return on Investment of $100,000 in December 1979)

17 High Level Financial Advice Slide 17 …but not so over the long term

18 High Level Financial Advice Income & Capital Return on Investment of $100,000 in December 1979: Industrial Shares vs Term Deposits

19 High Level Financial Advice

20 Annual returns of Australian shares Refer to the appendix for notes on the data

21 High Level Financial Advice Long term wealth accumulation by investing in industrial shares - Return on Investment of $100,000 December (Income and dividends reinvested) Refer to the appendix for notes on the data

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25 Investment Demand Fuelled by Foreign Buyers – 43% of new loans int only!

26 High Level Financial Advice

27 The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. North West Wealth Management Pty Ltd ACN ATF North West Wealth Management Unit Trust ABN trading as North West Wealth Management Authorised Representative of Apogee Financial Planning Limited ABN is an Australian Financial Services Licensee and has its registered office at Miller Street North Sydney NSW A member of the National group of companies. From time to time James Smith, members of the National group of companies, associated employees or agents may have an interest in or receive pecuniary and non pecuniary benefits from the financial products and services mentioned herein. JAMES SMITH (BBus, DFP) PO Box 1904 Tamworth NSW 2340 P F Website

28 “North West Agrifinance believes that regional farms, families and businesses need specialised financial structures and clear business planning to achieve their goals. Our experienced team ensures our valued clients have choice, flexibility and transparency by delivering proactive finance solutions.”

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30 Not going in to rates in detail today. Everyone quotes rates and fees differently Key is total cost of funds – eg Toyota, banks Usually base cost of funds plus customer margin Liquidity margin - 12 basis points to over 100 but now falling back again. Interest Rates

31 What is the key risk to your business? Climate, interest rates, liquidity??

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34 No real changes officially LVR up to 70% against rural non-specialised Int cover and debt servicing ratios Ability to pay back principal now important Good business no problems... Poor business not getting done now. Crop and inventory funding much scarcer Underwriting Standards

35 Information required – relevant, accurate, up to date and ongoing. Management ability more important than ever Equity and security nice, cash flow is KING Lenders using industry information to benchmark What the Lender Wants

36 Many different options Key is to match facility with usage and term Too many overdrafts that are term in nature Fixed v’s variable Interest only v’s P&I Equipment, inventory, stock Debt Structuring

37 Finance is a cost of production Total cost is the key – 1% margin at one lender is not the same as another. Effective interest comparison Have your information together and organised Get the lender to come on farm (assuming it is in shape!) Getting the Best Deal – Talk to Us!

38 Be positive but not arrogant Once again, ensure your limits are adequate – add 10% to costs and take 10% off income. Get help if you are not comfortable with the process NOW is a great time for all good businesses to renegotiate with their lender. Getting the Best Deal (Cont’d)

39 Doing this every day Know what all the banks are doing and pricing Avoid the pitfalls Value for money Especially in a more challenging credit environment Independent view Benefits of Professional Advice

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42 EYCI vs AUDUSD

43 4 th September 2014

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45 Strong businesses can demand a great deal, but need a professional approach. Now is a great time to examine your finances. Get the structure right... facility types, limits, interest timing, hedging. Look at your total funding cost, not base rate in isolation. Everyone quotes differently. Cash flow is king, security is secondary. Take Home Messages – North West Agrifinance

46 Any questions? Feedback sheets please! Testimonial also appreciated Thanks to Gowrie RFS and Progress Thanks to Derek and Kirrily BBQ and drinks available for small donation More info and copy of presentation at Final Thoughts / Questions?


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