Accelerated Mortgage Repayment
Techniques to accelerate the mortgage payments take a variety of paths.
A financing technique whereby interest only is applied to an investment loan and income from the asset is directed to paying down the principal of the loan can accelerate the repayment of this debt where the interest is non tax deductible.
The creation of a 10 year sinking fund which is tax-free can be a useful way to plan debt elimination at the maturity of the bond.
Closer to retirement it makes more sense to salary sacrifice super rather than pay the mortgage as dollars sacrificed to super generally attract a 30% tax deduction which can be withdrawn to pay out the mortgage on retirement.
We have numerous other strategies which we are sure can materially alter the timeframe of your mortgage repayment period.
Capital Safe Investing
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 Lighthouse Partners we can help you to find a suitable guaranteed investment for your needs.
Gearing is simply the process of adding to your own starting sum a borrowed amount. 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.
Properly used, 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.
One of the features of a geared investment plan is that it will usually generate tax deductions for the interest paid on the borrowed amount.
Usually a lender sets a figure where it reserves the right to recall the loan or demand that the borrower either injects more of his/her cash to the investment or repay some/all of the loan. This is referred to as a Margin Call, and it is a call for a return to a position where the lender feels more comfortable with the security given by the borrower.
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.
Another way to avoid the risk of a margin call is to borrow the loan amount from yourself, that is, redraw it from your mortgage account. The interest should still be deductible if used to produce taxable income.
All of our advisers are qualified to assist you with these types of investment plans.
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, and still others 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.
Whatever the situation, we can help.
Tax Effective Plans
There is a growing class of investments that provide considerable taxation relief to investors.
This relief can come in the form of tax deductions on the amount placed into a complying investment or in the form of tax-free income from an investment.
We can assist clients with both types.
The most common type of tax-deductible investment is an investment into an approved superannuation fund via salary sacrifice.
Tax relief on income received from an investment often comes from imputation credits or tax deferred situations.
Again, we can advise on these important types of investment.
Direct Investments and Shares
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 share broker or analyst.
Of course direct investments like shares and fixed interest instruments can be held outside the management facilities of a Masterfund or Wrap too.
Masterfunds and Wrap Accounts
A masterfund or wrap account is a management tool that is commonly used to collect investments 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.
We use a number of key masterfunds and wrap accounts as part of our service to clients.
Managed Family Super Funds
The fastest growing element of the Superannuation Industry is in the area of self managed super. The experiences of the Global Financial Crisis have prompted many to take control of their funds and apply the same prudent financial expertise when looking after their own personal affairs.
The concept of a self managed fund usually is done in concert with an adviser and an administrator who looks after the tax, audit and compliance issues.
Thankfully for balances over $500 000 the cost of running the fund is generally cheaper than investments held in master trusts.
“This website contains general advice only. Please contact me to determine whether the information is appropriate for your particular needs, financial situation or objectives prior to making an investment decision.”