Cashflow Matters How to efficiently manage your cash

2 Disclaimer The Macquarie Cash Management Trust ("Trust") is offered by Macquarie Investment Management Limited ABN ("MIML"). The information contained in this presentation is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. Therefore, before making a decision to invest in the Trust based on this information, you should read the Product Disclosure Statement (PDS) for the Trust and consider whether the investment is appropriate for you in light of your objectives, financial situation and needs. Applications for investment in the Trust can only be made on an application form included in or accompanying the current PDS. Investments in the Trust are not deposits with or other liabilities of MIML, Macquarie Bank Limited, or any other Macquarie Bank Group company and are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank Limited nor any other Macquarie Bank Group company guarantees the performance of the Trust or the repayment of capital from the Trust or any particular rate of return.

3 Agenda  Australia’s cashflow quandary - why cashflow matters  Safe Hands – cashflow patterns  Paying yourself first – assets and liabilities  The debt traps – spotting the killers  The service engine – how a CMT fits in  Cashflow management skills needed for success

4 Living longer, working shorter Grandad Dad Me Working years Retirement years Figures are for illustrative purposes only 23 ? My kids

5 Our ageing population Source: ABS,

6 Financial independence = Building personal cashflow to replace employment cashflow cost of living cashflow to meet

7 Real net national disposable income per capita Real household final consumption per capita

8 In summary We have…  An ageing population  Strong economic growth in the past 13 years  Real net income growth Which means…  Making money is not our problem But…  Consumption has increased  No real wealth is achieved … Managing cashflow is our problem

9 Think like a business Income Statement Balance Sheet Expenses Income Assets Liabilities How healthy is your cost to income ratio? vs

10 Asset or liability? Cashflow patterns of assets and liabilities Liabilities Assets Assets pay income e.g. shares; investment property; etc Liabilities cost money e.g. home; boat; car; etc

11 Safe hands – handling the cash Cashflow pattern No.1: Hand to mouth Income Expenses Liabilities Assets Salary

12 Safe hands – handling the cash Cashflow pattern No.2: Hand to bank Income Expenses Liabilities Assets Salary Focus on looking rich

13 Safe hands – handling the cash Cashflow pattern No.3: Handled for growth Income Expenses Liabilities Assets Salary Positive cashflow management

14 Make cashflow an agenda item  Understand current cashflow patterns  Commit to a cashflow strategy  Develop a cashflow system  Create a positive cashflow strategy

15 The debt rollercoaster = Mortgage = Credit cards + Mortgage re-draw accounts = Consumer marketing: “You can enjoy the extra freedom that comes with greater spending power…”

16 Chart to financial independence $ Years to financial independence New car purchase Home renovations Financial independence Passive income Cost of living

17 What is needed to change your behaviour? You need to: Get financially emotional  Think like you are a business  Understand your personal cost to income ratio  Chart your road to financial independence Start now  Start a budget  Understand your assets and liabilities  Pay yourselves first  Put a system in place to manage your cashflow

18 A cash management system Source: Macquarie Investment Management Limited 2004

19 Implementing the system Expenses LiabilitiesAssets IncomeCost of living Debt repayments

20 Implementing the system Expenses Liabilities $300,000 Assets $200,000 $6,000$3,000 $2,000 $1,500 $500 $5,000

21 Where is your money? $720,660,000 Source: Are you happy with your interest, services and fees? Are you making the most of your funds?

22 Macquarie Cash Management Trust  Safe alternative to the banks – AAAm rated  Highest client service experience – ‘above and beyond the call of duty’  Interest on all your cash  No entry or exit fees on investment transactions  With your permission, your adviser can access your account details  Easy to understand statements  Full internet and phone banking facilities *fees do apply for some transactions

23 We’re always improving… Although we have the largest and oldest Cash Management Trust in Australia, we’re always looking at ways to improve it… – 24 hour phone service 1999 – 24 hour internet service 2000 – the Macquarie Gold Card 2001 – BPay online payments 2002 – online transacting and other services 2003 – automatic downloads to your adviser’s software 2004 – online interest and dividend form

24 Want further information? Speak to your adviser And read this…

25 Summary Working with your adviser to: Establish discipline Know your cashflow Understand cashflow patterns of assets Understand cashflow patterns of liabilities Define key financial goals Develop a cashflow management system that works Track your investment income Build long-term sustainable results

Macquarie CMT Smart cash management solutions made simple