Case Study

Case Study2017-06-21T17:09:29+00:00

A salary earner at the age of about 50 started investing semi-regularly.  All dividends that she earned ware reinvested in various shares.  She kept at it.  At about 65 she retired.  Already at that stage she didn’t qualify for a Centrelink pension.  Even after retirement, any cash and dividends she didn’t use purchased more share.  The lady ignored downturns and recessions.  She lived through the GFC.  She just kept investing what she didn’t need.  At 80 she became our client.  I received a phone call asking if I would take over the paperwork and look after her tax lodgement obligations.  On review and during the rebuilding of the history of the portfolio, I even found shares in companies that didn’t even exist anymore.  But still she invested.  The rebuilding process took about 60 hours.  Was it worth it?  It sure was.  The investor’s portfolio was worth $1.8 million, had about $75,000 dividends land in her cheque account, had bout $30,000 imputation credits, had received bonus shares purchased by non-taxable dividend income (pre CGT arrangement) of about $40,000.  The next two years were similar from an income point of view.  But in year two, the portfolio was worth $2.4 million.  The third year of her engagement of our services the portfolio rose to $2.5 million.  This portfolio has risen even more since.  From time to time I receive phone calls from the investor seeking advice on share acquisitions to invest surplus income.

This was only one case study.  We have families that are just falling over their wealth, because they now the rules for successful investing – consistence and long term.  Investing in flashy cars and a nice house will keep high net worth people looking rich, but cash poor over the long term.  Hold off, get on with investing, and you’ll set yourself up and your for a money worry free future.  We coordinate the estate planing needs of high net worth people so the family’s wealth that has been carefully built over decades is not ripped apart in months of disputes.

A common killer of wealth generation is the over reliance of tax planning.  unfortunately, planning wealth around tax strategies will more often than not mean less tax (the good bit), more interest, little or no (net) income and limited reinvestment opportunities.  The use of borrowing to invest needs to be very well considered before accepting it as appropriate.

In this case study, no borrowing was ever used.