Friday, November 11, 2005

investment/retirement newsletter Nov 05

Hi this is Bernard Kelly

When I asked for suggested inclusions in this (November 2005) newsletter, the responses were mixed and varied. So I want to respond to just one in this edition - the most widely requested topic. I’ll address others in future issues.

And so in this issue I’m addressing your most widespread concern: "Will we have enough money to see us through?"

♬ And look out for details of the two (free entry) Trade Promotion Lotteries at the foot of this edition.

Legal Disclaimer:

This newsletter is provided as an informational service only. I nor Birdwood Financial Group do not assume any responsibility for the legal/tax consequences of using the material herein or a portion hereof. Legal, tax, accounting, insurance, and investment advice is strongly recommended in the application of the information herein, and you are advised to consult competent advice on a local level. This is general information only and should not be relied upon or used as a substitute for financial or other professional advice.


Retirement Planning involves many considerations, including answering these three important questions:

1: How much money do I need to retire comfortably?
2: Where is that money going to come from?
3: How can I make my money last through my lifetime?

As important as investing for our retirement is, most people never take the time to answer basic retirement planning questions such as these -- much less put together any type of formal plan.

It seems there are always more important and urgent matters that need attention. Many of us in mid-life find ourselves sandwiched between caring for parents and raising children. How do you save for retirement and your children's education at the same time?

You know my answer – through (properly structured) negatively geared residential property investments in strong growth suburbs near to an abundance of employment.

The fact is, only one in ten of us will be financially prepared to retire when we reach 65.

After years of steady increases, the percentage of individuals claiming to be saving for retirement is starting to fall, as we are becoming less optimistic about retirement. Fewer are confident they will have enough money to retire comfortably. The world economy, fear of layoff or unemployment, and the spiraling cost of health care procedures are all contributing factors for sure.

Every generation has had its share of issues and concerns to deal with. However, there are many new and special factors converging at this point in time that will make retirement for the baby boom generation and those that follow very different from previous generations. These factors are indeed changing the very face of retirement!

While many of these new and special factors are readily identifiable, their impact will not be known for many years to come. New factors and issues will continue to emerge as well.

As Alan Kohler said last week (on 5 November, writing in Fairfax newspapers) both the government and the corporate sector has transferred the responsibility to fund our retirement solely onto each of us individually.

And the second point that Kohler made was that the whole idea (of having to make decisions about our retirement while we are still relatively young) is a new concept.

Planning for retirement involves not only identifying these factors, but by necessity, will also involve and require you to make assumptions about these new factors and issues, and about the future in general. Of course it's impossible to accurately predict the future. But, it is possible to look at the past and to make educated guesses about the future.

Your financial well being in the future depends upon the ability to educate yourself on financial matters and to develop a financial plan for retirement. According to a number of recent surveys, happiness in retirement is proving to be more and more a function of advanced planning. Research shows that people with a financial plan have twice the money saved for retirement as those without.

Getting started can be tough. Some people who would like to start planning state they simply are not sure how to get started. What is involved in putting together a plan? What questions need to be addressed ? What factors need to be considered ? What financial calculations are necessary, and once made, how do I have confidence they are correct? How do I know if the assumptions I am using are in fact reasonable?

Do not let getting started be a problem. By not taking any actions to create a plan, you have by default created a plan - a plan that will result in your well being in retirement being controlled by others to a great degree.

If you are employed, you are paying into the mandatory superannuation contribution program, so the fact is that you have already started saving for retirement. The real issue becomes taking control of your retirement planning and saving for your retirement!

There are many reasons to start planning and saving for retirement as early as possible. The cost of retirement will be expensive, and the sooner you start the more positive factors you will have working in your favor- such as having the taxman and your tenant contributing a substantial proportion of the cost of your investment properties.

We are living longer and the population is getting older. Our demographics will cause profound changes in many aspects of our lives, as the baby boomers overlap their parents as retirees.

Average life expectancy was 46 at the turn of the 20th century, 65 in 1935, and is now 75+ as we move ahead into the 21st century.

For a 65 year couple, odds are better than 50.0% that one will live to at least 90.

Whereas retirement used to last ten to twenty years, today's retirees will need to plan for 20, 30, or even more years. This means retirees are likely to incur expenses for a longer period of time than previous generations and will need to make their nest egg last longer.

If inflation continues its long-term average of 3.0 - 4.0%, retirees will see their expenses double during their retirement years.

How do you balance your portfolio to account for inflation, while at the same time fearing that you might outlive your money?

As you know, I am willing to explore with you your options to secure your long term security.

You can email me your queries to or phone my mobile 0414 778 518. I’ll be quite happy to spend a free no-obligation 20 minute consultation with you on the phone.


Bernard Kelly

Special Offer. In this my chosen professional career, my fundamental role is to sit with people and assist them explore their investment strategies. And for this – my business - I have an internal marketing budget. I have developed two Trade Promotion Lotteries, conducted under the provisions of the (Victorian)Gambling Regulation Act 2003 and the Gambling Regulation Regulations 2005.

It works like this: for every face-to-face consultation, I put your name into a barrel for a cash prize of $1000. And after every 25 meetings, there is a winner. You have a one chance in 25 to win! And when we meet, I offer you another free entry into the second Trade Promotion Lottery. For your free entry – to win $4,000 cash with a one in 15 chance – all you do is to nominate five other parties (in similar economic circumstances to yourself) who would benefit from a face-to-face consultation with me.

Feel free to phone me on 0414 778 518