It helps to consider how you would approach buying a house. Would you sign a check and move on in? Or would you research everything first to make sure you aren’t getting a lemon? Treat starting your own business the same way. Don’t invest your time, money, energy, and dreams in a business you don’t understand inside and out. More businesses fail for want of proper planning than do for want of money.

Business plans are perfect for taking you from ignorance to understanding. In order to produce a good business plan, you must learn all the ins and outs of your proposed business. And the process of preparing the plan will teach you much of what you need to know in order to run that business.

The main reasons people skip business plans are often the same as the reasons people avoid accounting: 1) many people don’t like to write and 2) the time it takes to prepare the plan takes away from the time to run the business. But those reasons – those excuses, really – are just as inapplicable here.

Just because you don’t like doing something doesn’t mean you don’t have to do it. Running your own business will mean sacrifices. Luxuries like vacation time, sick days, salaries – these are the first things to go out the window (at least in the beginning). Taxes must be paid, shipments must go out, decisions must be made, invoices must be sent, and bills must be paid – whether you like it or not. Same with accounting. Same with planning. And, as with accounting, you can always hire someone to prepare your business plan for you.

The second reason people often skip the business plan stage is because they want to spend the time it would take to plan their business to be in business instead. They see the planning stage as taking time with no reward. But not only is that not true, it is also supremely short-sighted. It may be true that taking time upfront to plan your business will increase the time until you can start making money. But it will also likely increase the amount of money you can make. Writing a business plan allows you to explore your business before you start. It allows you to make your mistakes on paper rather than in the real world.

Write a business plan. You’ll be better for it. It will save you hassles and make you money in the long term. A good resource is my book “The ABC’s of Writing Winning Business Plans.”  This book can be purchased here:  The ABC’s of Writing Winning Business Plans

What are some of the hassles you might be saved if you take the time to prepare a business plan? How about quitting your day job only to find your great idea won’t pay the mortgage? Or resorting to credit cards to finance the business? Many businesses fail within the first five years. Of those that fail, a staggering amount do not have business plans. An old carpentry adage says, “Measure twice; cut once.” Let your business plan be your measurement.

Myth #1: Only people who have already accumulated wealth and/or assets can see a financial adviser

This is one of the biggest myths surrounding seeking professional financial advice.  Most people believe that you need to have already established yourself financially before a financial planner can help you.  Some financial advisers will only want to work with you if you have some established assets as by advising you on how to allocate this wealth this allows them to be paid.  At Financial Spectrum, our financial advisers are fee-for-service, or charge a flat fee instead of earning a commission.  This means that they are able to assist you in accumulating wealth through things such as setting up savings plans and budgeting, whereas other advisers won’t as they wouldn’t earn a commission for this advice.  The value of advice at the early stages of your life can be just as great, if not greater than when you have already built up your wealth.

Myth #2: Financial Planners just sell their clients managed funds

Many people believe that financial planners just sell managed funds to their clients.  This isn’t true.  Whilst a financial adviser can recommend their clients invest in specific investments as one tool to help grow their wealth, a holistic financial planner will look at areas such as debt reduction, tax minimisation, property, shares, superannuation, insurance, and cash flow just to name a few.  All of these areas are important when looking to grow and secure wealth – not just investing into products.  Some financial advisers have a greater emphasis on placing their clients into managed funds as this provides them with payment via a commission.  This perhaps may explain why this myth is a common one.  Not all financial advisers are equal however.  Financial Spectrum is in the minority when it comes to offering clients truly holistic advice.  Because Financial Spectrum doesn’t earn commissions, its’ financial advisers place just as much emphasis on areas such as paying less tax and budgeting, as placing clients in managed fund investments. 

Myth #3: I’ve already got an accountant, so I don’t need a financial planner.

Many people already have an accountant that they know and trust for their financial needs so they don’t think that they would benefit from seeking the services of a financial planner.  What most people don’t understand however, is that although it is very important that accountants and financial planners work together in partnership, both fulfil very different needs.  Financial advisers are trained to take a more holistic approach to your finances than accountants are.  Whereas an accountant will complete your tax return or offer advice for small business, a financial planner will work with you on understanding your life goals and help to implement a financial plan to help you achieve them.

At Financial Spectrum, we work closely in partnership with accountants to ensure that our clients receive the benefit of a team approach.

Myth #4: I don’t need a financial planner – I’m nowhere near close to retirement

A common misconception is that financial planners are only to help retirees or people starting to think about retiring.  This is very far from the truth!  Whilst it is true that there are many financial advisory firms whose target market are retirees, at Financial Spectrum we believe the true value of financial advice can be gained by starting early.  Most of our clients are younger professionals in their 20s, 30s and 40s who are at the accumulation stage of their lives.  We know that we are in the minority when it comes to our competitors but we are passionate about helping young Australians get ahead financially.  We help our clients to map out the goals they want to achieve in the short, medium and long term, and work with them to implement a financial plan to help achieve these goals.  Time is your biggest ally when it comes to setting yourself up financially – so don’t wait until you are in your 50s and 60s to start planning for the future! 

 

Myth #5: Financial planners charge too much and get hefty kickbacks from companies they recommend their clients invest in

Financial planners have received a lot of bad press over the years and the result is that many Australians have a very negative view of the trustworthiness of the financial planning industry.  In truth, individuals authorised to provide financial advice to people in Australia are bound by strict regulations from the Australian Securities and Investments Commission (ASIC).  All remuneration received by implementing a proposed financial plan must be clearly outlined in a Statement of Advice (SoA) which must be given to the client.  This enables transparency in the financial planning process so that you know exactly how much your financial adviser will be paid in relation to your financial plan.

At Financial Spectrum, we’ve gone one step further and developed a fee-for-service or a fixed fee payment structure so that we don’t receive any commissions from any investment product that we recommend to our clients.  This means that our clients pay for our advice.  We believe that this fee structure helps to protect our clients from potential conflicts of interest.  In addition we offer a range of packages for our clients to select from so that they can feel comfortable that they’re getting value for money.

 

Myth #6: All financial advisers are the same.  Shouldn’t I just see the adviser at my bank branch?

There are financial advisers, and then there are financial advisers.  Whilst it’s true that all financial planners in Australia must be authorised under a financial planning licence from ASIC, it is important to know that there are potential conflicts of interest that may arise by seeking the services of a financial adviser who is connected to a large institution – be that a bank or other financial institution.  Why?  Financial advisers who are part of financial institutions who offer their own financial products (eg. life insurance and investments) will likely be restricted to a small selection of products that they can offer their clients.  This means that if you went to Bank XYZ seeking advice and the financial planner at Bank XYZ identified that you need income protection – it is likely that they’ll be restricted by the XYZ Bank to only provide you with advice to obtain an XYZ Income Protection policy.  The problem is that your XYZ financial adviser might know that a better policy for your situation can be provided to you by ABC Life Insurance, but because they are part of the XYZ institution, they can’t offer this policy to you.

The good news is that not all financial advisers in Australia are part of large corporations and therefore are better able to provide you with a wider selection of investment and insurance products from a range of providers in Australia.  These financial advisers tend to be known as “boutique” or “privately-owned” financial planning firms as ASIC restricts the use of the word “independent”.  These small boutique financial advisory firms are in the minority as many have been bought out by the larger institutions and do not have the massive monetary resources of their competitors, but they are out there and can offer you great financial advice.  Financial Spectrum is one such privately-owned financial planning firm based in the Sydney CBD.

A loved one has passed away. What happens now?

A person known as an Executor is appointed to gather the assets of the deceased person, pay their debts, and distribute the balance amongst their beneficiaries. If they had a will, this person will be appointed in accordance with the deceased’s wishes. If the died without a will (known as “intestate”), an Executor is appointed by the State.

What are the tax implications of receiving an inheritance?

As there are no death duties in Australia, death itself does not incur any extra tax. However, if you inherit an asset and then sell it, you may be liable for Capital Gains Tax (CGT). One of your aims as a beneficiary will be to minimise or avoid this tax.

The family home: Normally the family home is exempt from CGT. The same applies if you inherit a family home provided you sell it within two years. Outside of this period, you would be assessed on the increase in value since the date of death at the time of sale.
Other assets: If you inherit other assets such as property (other than the family home), shares, and other investments, you may be liable for CGT if you sell them. It depends on when they were purchased. You can save money and hassle by finding out their purchase price or their value at the date of death.
Tax returns: In the year of the deceased’s death two tax returns are required – one for the deceased person up to the date of death, and one for the estate for the remainder of the financial year. Both tax returns qualify for the full tax-free threshold. Less tax may be payable if the estate sells an asset and gives you the cash rather than you getting the asset and selling it.

Getting financial advice for inheritance

Knowing what to do after receiving an inheritance can be difficult. A professional financial planner can assist you in managing your inheritance to ensure that you maximise your investment potential whilst minimising the possible tax implications. For more information or to arrange your free first meeting with a Financial Spectrum financial planner in the Sydney CBD, give us a call on 02 8238 0888, or fill in our online appointment request form.

Infinite Banking is a process that allows you to recapture the purchase price of any purchase you make and pay yourself the interest that normally would be paid to another financial institution. Many Americans are searching for safe ways to create wealth. At the same time these individuals search for products and investments with higher rates of return, they need money for things like cars, homes, medical/dental, vacations and so forth. The process of Becoming Your Own Banker is a way to utilize your capitalas a bank would, but this time you are not only the banker, but the borrower.

 

By controlling your capital, loaning it out, paying it back diligently and honestly wealth is created almost by accident.

 

You need to understand that even using your own money and paying cash for an item has a cost to it. You either give up the interest that you could have earned by paying cash, often referred to as opportunity cost, or you pay someone else interest to use their money, there is no other way.

 

By becoming your own banker you pay yourself the interest, recapture the purchase price of the item, and keep complete control over your assets. Incidentally, use these banking concepts in a business structure and you gain additional tax benefits that make the concept even better.

 

The concept is Becoming Your Own Banker, and it works very well, however by using the right vehicles the concept can be enhanced. The vehicles we use give advantages such as these:

 

Tax Deferred Growth

Tax Free Income

Income Tax Free Death Benefit

Collateral

Competitive Returns

Unlimited Options (Loans)

Unlimited Contributions

Creditor Proof

No Probate

Liquidity, Use, and Control

Passive income for Golden Years

 

These are very impressive, and by doing it right this can be accomplished.

So, today, I’m going to run through the key areas that we run through with each client to take a ‘barometer’ of their financial planning health.

Let’s get started.

So, have you…?

1. Really thought about what you want for the rest of your life?

The dreaded ‘setting goals’ part…You’ve already done this for your career and no doubt in other parts of your life as well. So, now’s a good time to take stock and think about how you want your life to look from now on. It may well be that it’s in tip top order and nothing needs to change – the key is to go through this ‘discovery’ process with you and your significant other.

2. Fully organised your various assets and analysed how they will help you achieve your goals?

A major goal for all doctors and dentists is planning towards retirement. I presume you have other goals as well, ones that will require money to achieve? So, the question is: will what you’re doing now with your finances allow you to achieve your most important goals? You may or may not know the answer to this. After all, it can sometimes be difficult to work out whether you’ll have enough money for your future.

3. Completed a detailed expenditure plan so that you’ll know how much money you’ll need to live the life you want when you stop working?

How much money, after tax, will you need to fulfill all your goals once you’ve stopped working (and the salary/net profits have ceased)?

£3,000 per month?

£5,000?

£10,000?

What’s YOUR number?

This exercise is crucial and it’s what drives many of the financial decisions that you’ll face between now and giving up work.

4. Created your own Financial Forecast to show when your ‘Financial Independence Day’ will be?

At what age COULD you give up work if you chose, even if you decided to continue working? Financial forecasting will allow you to see your financial future and help you make your financial decisions. Now, it probably IS possible for you to do this exercise yourself, maybe using Excel or a similar tool. However, I would advocate using the services of a financial professional that provides this sort of analysis. Not all do, so you may need to do some detective work. A good place to start is the Institute of Financial Planning’s website.

At the site you’ll be able to search for Certified Financial Planners (you’ll find yours truly on there). Whilst that will not guarantee that they offer financial forecasting to their clients, there’s a high probability that you’ll find one that does.

The KEY benefit is that you’ll be able to work alongside someone that is able to provide you with an objective viewpoint without having an emotional attachment (that inevitably you and your friends or family would have).

5. An overall written Financial Plan and Strategy to guide you over the years?

If you’ve taken the time to take action on the steps above, the KEY is to implement your plan. What action do you need to take to increase your chances of achieving your most important goals?

You’ll probably find that there’s quite a bit of work involved initially, but if you set things up the right way, the ongoing time required to keep your financial plan on track should be minimal, especially if you are using a Financial Planner to drive’ the whole process for you.

Yes, ok, I’m obviously a little biased in my comments seeing as I earn my livelihood from working as a Financial Planner. But let me ask you a question.

How valuable is your time?

Looking at it another way, do you do your own accounts each year?

Exactly! So why spend hours each year trying to learn a skill that you can outsource to a competent professional who performs that role all their working lives?

Choosing the right Financial Planner is a very important decision. Take your time and make sure they are offering a long term strategic financial planning service, rather than a product retailing service (which actually may be fine if that’s all you need).

And make sure you pay them a fee for the service they provide. If they only work on a commission basis, guess what will probably happen at some point in your dealings?

Think about it, how else would they earn an income if you don’t buy a product? (that’s not to say commission is bad – I just believe it should not be used to remunerate a Financial Planner who is providing you with a comprehensive financial planning service).

6. Made sure your Wills are up to date? (assuming you have one)

You do have a Will, don’t you?

If not, this step is crucial. Let’s say you’ve gone to the trouble of putting in place all the steps highlighted. By not taking this last step, all your hard work could be undone. Without a Will, you would die ‘intestate’ and your assets would NOT be distributed in line with your wishes.

So, contact a solicitor and get it set up! The cost is not too much and once you’ve done it you’ll be able to tick another box on the road to creating your robust financial strategy

Whilst you’re getting the Will sorted, ask the solicitor about setting up Lasting Powers of Attorney. In brief, These are legal documents and they provide consent to another party to act on your behalf to deal with your relevant financial matters should you be incapable of doing so.

7. Investigated how much risk you are taking with your investments?

If you have ANY money invested in traditional investment schemes such as personal pensions and equity ISAs, you owe it to yourself to take the time to analyse how risky your investments are. Sadly, some medics and dentists believe they have diversified their risk simply by holding a number of funds within their ISA/pension. But what if all these funds are equity based funds? It’s entirely possible that they are taking too much risk with their money but may not necessarily have access to the right information to make better investing decisions.

8. Analysed how much risk you SHOULD be taking?

Even if you have a good grasp of how much risk your money is exposed to, do you actually know whether you should be taking more or LESS risk in order to achieve your goals? For example, if you’re on track to achieve all your goals, you may be able to reduce the amount of risk you are taking and still remain on track.

9. Checked how much you are paying in investment costs?

When you invest any amount of money into ‘mainstream’ products, such as Equity ISAs and personal pensions, a certain percentage of your money will be taken in charges levied by the investment company/product provider. Typically, these may include:

sales/advice commissions initial charge for the investment (usually ranges between 0-5%) ongoing annual management fee other fund expenses (known as Total Expense Ratio) trading costs within the fund(s) Now, I appreciate that delving into all this may not overly excite you. That’s fair enough. But just because you don’t have the time/interest/inclination doesn’t mean you should ignore it!

As with point 5, get it outsourced to a competent professional. The end result you’re looking for is to check how much you ARE being charged and whether you are able to reduce these, where possible.

10. Recently completed a proper psychometric risk evaluation?

What makes you tick? Do you know why you’ve made certain investment decisions in the past? What influences your decision making process? Rather than simply judging your attitude to investment risk on a scale of 1:10, you need to go ‘deeper’. There are tools available to help you understand how you make financial decisions and how to improve your ability to make these important decisions. Ask us, or your financial adviser/planner, for more information.

BONUS STEP

11. An Investment Philosophy to take you through good times and bad?

Does your investment portfolio consist of a collection of funds that perhaps were selected a number of years ago (and have not been reviewed since), or do you have an investment philosophy that underpins all your decisions?

It’s probably fair to say that many medics and dentists will fall into the former camp, although that’s often the case because their financial adviser/planner has not developed an investment philosophy of their own. Ask your adviser/planner (if you use one) what philosophy they are using for the management of your money.

So there we have it. If you’ve read this far then you’re obviously serious about your financial future. Now all you have to do is take action and make it happen!

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51 Ways to Save Taxes. Money, Financial And Tax Planning Guide

It can be absolutely hard to do away with bad credit even when you have a debt consolidation plan, most especially when you still use your credit cards indiscriminately. To succeed with a debt consolidation plan, you are going to avoid using your credit card too much. A lot of individuals fall into the false sense of security that a debt consolidation loan give and may end up using more cash on their credit cards.

It is imperative that you consult a debt consolidator expert on the best way to consolidate your debts if you are planning so. A debt negotiator expert is one who is totally knowledgeable at bargaining and negotiating debt terms. A good debt negotiator will make sure that you walk away with the best debt consolidator deal.

Debt consolidation loans help to ease worry and anxiousness from your mind because it enables you pay off your outstanding debts. Thanks to debt consolidation loans, you can simply do a way with all those credit card debts that are scattered all around the whole place. Consolidating your debts help to bring clarity and purpose to your debt payment plans– more organized approach of debt payment.

It can be very embarrassing to have creditors knocking on your door because of your debts, right? Lots of debtors have been dragged to court over credit card debts. With the right debt management loan, you can easily avoid the embarrassment of house calls and court orders related to outstanding debts.

Christian debt consolidation companies help to manage the debts of Christians individuals. Christian debt consolidation companies help to negotiate loans for their clients and make sure that their debts are managed. If you are a Christian with a desire to manage your outstanding debts, you can consult a Christian debt consolidation company.

Apart from debt consolidation loans, there are other alternatives to get rid of debt. Some individuals get rid of debts by taking up two jobs to increase their source of income. But many people say that debt consolidation is the fastest avenue to pay off credit card debt.

An ideal candidate for a debt consolidation loan is an individual who has enormous credit card debts. Credit card debts can keep you away from perpetual misery and penury too. With a good debt consolidation plan, you can live your life with some measure of financial stability.

Remember, do not to trust all the low interest offers that most debt consolidation companies give as they may be bogus half the time. Stay away from debt consolidation programs that try to get you to join one affiliate program or the other. Try to research other debt consolidation alternatives before you make any choice.

 

Each year, student loan profit tariff are reconfigured on July 1st.  In current years, student loan date has occurred and used up with no basis for alarm, however this time is uncommon.  Equally part of a preparation to recover the nation’s $40 billion financial statement shortage, the board approved a strategy to cut $12.7 billion from the national student loan plan among 2006 and 2011.  The impression on students is a severe interest charge walk for recreation on all national student loans counting the Stafford loan, the PLUS loan, the Consolidation loan and profit charge loan. 

 

 

Like July 1st, the profit charge on recent Federal Stafford loans will bound from a wavering 4.7 percent to a plan ahead 6.8 percent during additional loans will expand from a alterable 6.1 percent to a fixed 8.5 percent.  The method to prevent these soar profit tariff is to lock into today’s reduce plan ahead charge by consolidating your loans. 

 

Below the extra legislation, students that are yet in school won’t be capable of performing to combine their loans.  It’s supplementary valuable than perpetually for current students and those who are in their post-graduation mercy epoch to grab loan current window of chance to refinance and clasp in the current charge previous to July 1st. 

 

A further student loan consolidating limit will be forced on the marital consolidation loan.  For years, married couples have be blessed the clarity and pecuniary profit of consolidating their student loan installment of fee.  Married couples yet have the opportunity to take benefit of loan chance by put into use for a marital consolidation loan previous to July 1st. 

 

Early on July 1st, borrowers will no extended in space have the chance to consolidate existent Consolidation credit with an uncommon moneylenders.  Except the current moneylender does not proposal a consolidation loan with profits insightful refund provisions, borrowers won’t have a few choice, as it reach to shopping nearby supplementary striking proposal and business concern of student loan. 

 

If you haven’t before expected time consolidated your student loans, call a student loan advisory and refinancing moneylender as soon as probable the student loan.  Operate online and examine in contrast various online loan business concern, express up on loan terms, work online personal digital assistant to appreciate your possible provision for future, and make in touch with a student loan consolidation proficient with a catalog of controversy. 

 

Student loan consolidation as of now proposal a resources of profit, not to declare the modernized advantage as a secure refuge from the July 1st profit charge walk for recreation.  Since installment of fee are linked and apply out on a extended in space epoch of period, monthly installment of fee are cut-rate of loan, freeing up currency surge for fresh adults who are solely opening their careers loan.

 

 

 Furthermore, having simply single exposed loan is added advantageous in conditions of credit pricing as opposite to many exposed loans that can decrease a general FICO mark of student loan.

 

Refinancing previous to July 1st yet contribute students single very last opportunity to clasp in reduce profit tariff and take benefit of additional soon-to-be graze money saving chance and scheme.