Wednesday, September 01, 2010

Retirement Strategies 1 September 2010

an off-the-plan 4 bedroom family home in a growth corridor will attract the ideal tenant and provide maximum financial benefits for the investor (right)


As we’re looking ahead 10-15 years with residential investment properties – to have something extra tucked aside when we finally get around to “retirement” (whatever that will mean then) – you should pay some attention to the long term view for the housing market available from the major banks.

In the August issue of the ANZ Bank’s “Australian Property Outlook”, they expect that dwelling construction this year and next year will be around 160,000, well short of the 200,000+ needed each year to eliminate the increasing shortfall.

The compounding impact of being 40,000 dwellings short each year will mean that the issue will become one of availability rather than affordability, and house prices and rents will doubtlessly rise during the next five years.

“It’s a good time to be a developer or owner,” said Paul Braddick, head of property and financial system research.

The basic problem is on the supply side, with not enough land being released for new developments.


Matthew Hassan, senior economist with Westpac, writing in “The Australian Financial Review” (31 August) believes house price rises will continue.

The starting point for this analysis is that current demand is around 180,000 new dwellings each year – to satisfy natural population increase and immigration. But for some time now we have been building only 150,000 annually, he says.

Pent-up demand could be eliminated in three years if dwelling construction increased by one third – from 150,000 to 225,000 – says Hassan. But this is virtually impossible, he says, because there isn’t enough approved land available for subdivision.

Alternatively, if immigration dropped back to historical levels (around 100,000 arrivals) compared to 300,000 last year, demand for new housing would drop back to around 140,000 dwellings. However the backlog is already so large that it would take five or six years for a balance to be established.

But immigration won’t be falling back any time soon – there is a massive shortage of skilled labour domestically, and demand continues to surge for higher education from China and India.

“The current undersupply,” he writes, “is the result of seven years of under-building and surging population growth, and in all probability will take a similar length of time to correct”.


With the implementation of the National Consumer Credit Reform on 1 July, banks are now required to assess the borrower’s capacity to repay.

For property investors in late career, just starting to build their portfolio, this has major implications.

Already one of the big four banks has issued guidelines that require re-assessment should the maturity of the loan be out beyond the borrower’s 75th birthday.

So if you’re aged 55 and seek a 20 year interest only loan, you shouldn’t have a problem.

However if your age is 65, you may be limited to a 10 years principal and interest loan.

Compounding this issue is another related “repayment capacity” test i.e. if you have to totally repay a loan in fewer years, the monthly repayments will be higher, so the bank will not lend you as much because your capacity to make larger repayments will be reduced.

• All this means that you shouldn’t delay in starting a portfolio of residential investment properties if you are planning for 20-25 years of comfortable retirement.


… but no one told you about planning for retirement.

When we were in our thirties, retirement wasn’t on our horizon. And it still isn’t for that age group.


Who wants to be told that you must save 20% of your income just for retirement when you’re in your 30s, with two children, with a family income of $120,000?

For the majority, this is just not realistic. You would be eating cat food for years in order to eat caviar later.

Fortunately, when you get into your fifties it’s not too late to start.

What you need is to implement my very successful investment strategy, plus deferring any thought of early retirement, and thirdly convert whatever hobby you have into a “profitable hobby”.

If you want to explore your options how to tuck something extra aside for retirement, contact me – Bernard Kelly – anytime.

My email is


As we are all locked in the compulsory 9% superannuation savings scheme – which is basically all invested in the share market – we need to diversify and lower our risk exposure to one such asset class.

Which is one of the reasons why I recommend residential investment properties, carefully selected for their ability to attract the ideal tenant, proximity to lots of jobs, where the growth is expected to be fastest, where rents are higher and where land taxes are the lowest.

The stock market, we know, can lose up to half its value – which could be disastrous if that’s when we are leaving paid employment and commencing your retirement.

Investment property may dip from time to time – but fortunately never loses half its value.

So be prudent – don’t put all of your eggs into the stock market.

Rather, tuck something extra aside through the very successful investment strategy that I share with my private clients.

“THINK AND GROW RICH” published 1937

As a teenager I read “Think and Grow Rich” by Napoleon Hill, published in 1937.

Now, 50 years later, I have returned to its wisdom.

And one of Hill’s key findings (you’ll remember that he spent years studying the lives of successful men) was that they are able to reach decisions rapidly, and rarely if ever changed their mind.

On the other hand, the least successful took forever to make a decision, and then too frequently changed their mind very soon thereafter.

As you plan for your retirement, are you able to make a rapid decision? If the answer is yes, I have the solution if you don’t have enough for 20-25 years of comfortable retirement.

Contact me – Bernard Kelly – anytime on email

If you want proof that my strategy works, go read the testimonials on

I’m Australia’s Retirement Strategist®

SUPER RETURNS 1997-2009 – A MERE 3.0% pa

Stephen Long - Economics Correspondent for the Australian Broadcasting Corporation- published his analysis of the superannuation system on 5 August 2010.

Based on statistics published by the Australian Prudential Regulation Authority keeps statistics his conclusion is that the net annual compound return is a mere 3 per cent.

That's barely ahead of the inflation rate over that time, which averaged 2.8 per cent.

Over the last decade the system-wide returns were below inflation, which averaged 3.2 per cent.

Long says “Think about it. Australians have, in effect, had a proportion of their wages compulsorily acquired and put into a retirement savings system that has seen their money stagnate over a dozen years and go backwards over the past 10.”

This raises a fundamental question: is this the best way to provide for workers in their retirement?

The answer of course is “NO”.

If you want my assistance in helping you explore options for a better investment strategy, contact me – Bernard Kelly – anytime on 0414 778 518 or email


NEW YORK, Aug. 9 (UPI) -- Four out of 10 U.S. adults who are not yet retired say they believe they will outlive their retirement savings, a survey indicates.

The results show 48 percent of those not yet retired say they will not have enough money to maintain their current lifestyle in retirement.

Fifty-three percent who are retired say they are concerned about their current financial situation.

The situation in Australia may be very similar.

If you have any concerns about having enough for 20-25 years of comfortable retirement, contact me – Bernard Kelly – anytime.

I’ll PAY YOU $5,000 …

… for each successful referral that you generate.

My practice helps late career couples plan for 20-25 years of comfortable retirement, by addressing the elements of personal health, financial security, family & friends and a zest for living.

I spread my marketing budget over various media, and it costs me around $5,000 to develop a new relationship. So I’m willing to pay you that $5,000.

Feel free to find out more about joining me as a Referral Agent. (We could have a lot of fun together. And you could make a lot of money - this year, next year, every year.) Your role is simply to generate leads – I’ll do the rest.

Let me know if you want to know more – for example, when will you get paid? where is the deepest pool of prospects?

Go to Facebook. Search for the page “Referral Team – RetireLaughing” and click the “Like” button

I’m Bernard Kelly - Australia’s Retirement Strategist®,


I’ll be at the Melbourne Retirement & Lifestyle Expo at the Caulfield Racecourse 10-12 September.

And also at the Leisure & Lifestyle Expo in Perth (Claremont Showgrounds) 29-31 October.

I look forward to meeting you if you can make either event.


Some kind people want to pay me for this service.

Feel free to go to my membership site and pay $110 for a full membership

About Bernard Kelly:

Bernard Kelly BEcon MBA CRPC Australia’s Retirement Strategist®, is a highly sought-after advisor, retirement authority, thought-leader, author and radio commentator because he makes the complicated and mundane topics of investing and retirement fun! Bernard has over 20 years experience providing families with financial thought. He is the author of Live Your Dreams in Retirement, Property Investing for Couples, Goolwa by Breakfast and Raising Decent Kids into Substantial Wealth and publishes a fortnightly newsletter that reaches thousands of subscribers worldwide.

19 Prospect Street, Box Hill 3128 Australia. Tel 61-3-9899 8577 mobile 0414 778 518

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