case studies 

ACD Financial has grown over the years as a result of clients valuing our advice and management and referring others to us. Many of our clients have been with us since inception over 15 years ago.

While market conditions and legislation have changed over the years and our clients come to us from varying backgrounds and cirmcumstances a typical scenario may be like the story that follows.

John and Mary come to us for advice as they are about to retire. They have been referred to us by their friends who are existing clients of ACD Financial. In the first meeting an ACD financial planner gains an understanding of John and Mary’s current financial position and objectives, listed below:

Assets                                                                       Liabilities

Owner occupied home                    n/a                          Nil

Cash in the bank                             $10 000

Investment properties x 2            $1 000 000

Employer super fund                      $200 000

Total                                            $1 210 000

They require $60,000 p.a. in living expenses and also want to have a holiday overseas, gift money to their children and renovate their home requiring around $100,000.

Currently their investment properties will not give them enough income after property expenses and tax to finance their annual income needs and the planned $100,000 renovations and gifts. They are now wondering if they should cash in their superannuation to meet these expenses.

It was important to understand John and Mary's attitudes toward property investment. After discussion about the ongoing need to maintain the rental properties, tenancy risk and the lack of diversification in their investment portfolio they agreed it might be time to sell one or both investment properties. 

The financial planner in discussion with their accountant considered the tax implications of selling the properties. Selling the properties over 2 years meant the capital gain tax could be reduced to Nil after making tax deductible contributions to superannuation. The proceeds of one property and $100 000 from the employer super are to be contributed to the tax free superannuation fund initially. The $100 000 balance from the employer fund is divided between cash and gifts to the children.

Recommendation:

Assets                                                                    Liabilities

Owner occupied home                   n/a                     Nil

Cash in the bank                           $50 000

Self Managed Super Fund           $600 000

Investment property                     $500 000

Gift to children                                $60 000

Total                                          $1 210 000

The outcome of our advice is that John and Mary had sufficient funds invested in a diversified portfolio of assets in a tax free structure to meet their retirement income needs.  They have been clients now for many years and tell us they still continue to sleep well at night.