FinancialFreedomHow much is enough?

Disclaimer

• The information provided in this presentation is of a general nature. To the extent that any information in this presentation constitutes advice, it is class advice only, and is not personalised to take into account an individual’s particular financial situation or goals.

• You should not make an investment decision based solely on the information in this presentation. To obtain advice that takes into account your particular financial situation or goals, please contact one of our financial advisers.

• Whilst every care has been taken in the preparation of this presentation, Spicers makes no representation or warranty as to the accuracy or completeness of the information.

• None of Spicers, any of its employees or agents, or any other party, guarantees the performance of any of the investments mentioned in this presentation, gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way from any error or omission.

• Past performance is not an indication of future performance and is not guaranteed by any party.

• Spicers is paid by charging fees for its advisory services. 

• A disclosure statement is available on request and free of charge from your Spicers adviser.

Spicers Portfolio Management Limited P O Box 55, Shortland Street, AucklandTelephone: 09 337 6407

Who are Spicers?• A leading New Zealand specialist

investment planning firm

• Helping New Zealand investors achieve their financial goals for over 25 years

• A network of 37 Authorised Financial Advisers in 22 locations throughout New Zealand

• In excess of $1 Billion funds under advice

• Part of the AMP Group

Planning for Financial Freedom

The key takeaways today

• What is financial independence?

• How are demographics impacting?

• How do you become financially independent?

• How much is enough for you?

• Where to start?

What is financial Freedom?

“Having sufficient financial resources to provide you with the choice to do what you want to do”.

“Working because you want to not because you have to”.

How much is enough?

What is your idea of financial freedom?

Bill and Mary

Bill & Mary’s situation

• Bill (48) and Mary (47)

• Financially independent at 58 (Bill)

• Less work, more travel & time with family

• Want an income of $60,000 after tax

• Current income $95,000 p.a. after tax

• Three children, 25, 23 & 21

• Prioritise own lifestyle, then the kids

Case Study

Financial PositionBill & MaryLifestyle assets Amount How is it owned?

Family Home $500,000 Trust

Investment Assets:

Bank Term Deposit $120,000 Joint

NZ shares $40,000 Bill

KiwiSaver $50,000 Bill & Mary

Inheritance to be received $100,000 Mary

Managed funds $40,000 Joint

Liabilities $0

Mortgage $0 Joint

Net Worth $850,000

Chattels & Cars $120,000

The Questions

• How much can they save over the next 10 years?

• How much do they spend now?

• Will that vary when they are financially free?

• How to manage the gap – if there is one?

• How do we know if they will have enough?

• What are the options if they don’t?

• Will Bill and Mary commit to a plan?

Bill and Mary’s Cash Management

You need to consider your own situation

Bill and Mary

• Financially free at 58 (Bill now 48)

• Wants an income of $60,000 pa after tax

• $350,000 in financial assets

• $500,000 house

• 100% entitlement to NZ Super at age 65

• money to last until age 90

• We will use a return after tax of 4% pa

Retire at 58

Source: Spicer Portfolio Management Limited.

Questions

• How much do they spend?

• Can they increase their savings?

• Are they prepared to work longer?

• Do they need $60,000 a year?

• How do they want to help their children?

For Bill and Mary

Retire at 62

Source: Spicer Portfolio Management Limited.

Eating the family home

Source: Spicer Portfolio Management Limited.

Options

• Is downsizing the house realistic?

• Can they afford to help the children?

To consider

Key Messages

• Start your planning early

• Understand your spending & saving

• Consider your consumption vs. saving balance

• Consider part-time work - 65 is young today

• Professional advice is available

How an adviser can help you reach financial

freedom?

Steps to do this:

• Clarify your needs & objectives

• Risk assessment and advice

• Comprehensive financial planning & advice

• Monitor and manage your progress

• On-going professional advice

To reach financial freedom

Where to start

• Take the opportunity for an initial discussion with an adviser

• Be prepared to work through the planning issues – it is better to confront them now than later

• Over to you and your adviser

The greatest fear is outliving your financial resources.

With some discipline and good planning, you can avoid this potential dilemma.

The strongest recommendation I can make is to find an adviser you like and trust who

you can talk to about your aspirations, dreams and money.