Property Strategies 1 June 2011

$500,000 THRESHOLD FOR SMSFs

One quarter of Self Managed Super Funds (SMSFs) struggle to make a positive return, a survey by management consultancy Oliver Wyman has found.

Annual management fees paid to accountants, financial advisors, brokers and the mandatory auditor – as well as amortisation of establishment costs – can come in towards $30,000 annually, and SMSFs.

And those with less than $500,000 in assets may not generate sufficient to pay these fees, the survey revealed.

Oliver Wyman is a member of the global Marsh & McLennan: “the world's leading insurance broker and risk advisor”.

VIDEO – WHAT WILL IT COST ME?

Generally, if you’re earning around $80,000 your out-of-pocket contributions to own an investment property may only be around $20,000 over the next six years.

Here’s my video on the topic http://bit.ly/lERpQi

YOU’LL NEED INFLATION-PROTECTED ASSETS

If you’re an Australian aged 65, the probability of you living to age 84 is 50%. Women will live a few years longer, men a few years less.

However if you're a married couple in your 60s there is a 50% probability that one of you will live to age 95!

However, and no matter when your “estate event” will incur, you need to consider how inflation can erode your income.

If you assume the long term rate will continue to about 3% per year and you need $60,000 per year to live now, in 10 years you would need $80,000, and in 20 years you would need $108,000!

So your retirement portfolio must be in inflation protected assets.

Which is why the very successful investment strategy that I share with my private clients has its focus on residential property.

If you want to know more about how to protect yourself against inflation, contact me – Bernard Kelly – anytime. (All you need to do is hit the return button on this email.)

AVOID BECOMING “COLATERAL DAMAGE”

There are storm clouds ahead for anyone approaching retirement, and who knows what will happen over the next 20-25 years?

In these uncertain times, when most of us don’t have enough for a comfortable retirement, you need to take evasive action to avoid being caught up as collateral damage in some widespread negative event.

We all know now – to our cost - that super funds have a fixation with equities, so diversification can be virtually important.

And we all know how inflation will impact on us in the decades ahead – precisely the same as it has ever done.

Until the Global Financial Crisis of 2007 hit us all, few of us had a Plan B for our retirement (and for those with one, it was “continue to work”.

Now of course that Plan B has become Plan A for many of us so let me suggest a new Plan B.

How about renting out rooms in your home?

At least with a plan – any plan – you are less exposed to becoming collateral damage.

If you would like me to help you consider your options, feel free to contact me – Bernard Kelly – anytime.

I‘m Australia’s Retirement Strategist®.

FLOATING DOWN THE RIVER OF DENIAL

In America, it is now predicated that their Medicare program will be insolvent by 2024, and that funds held aside for Social Security pensions will be exhausted by 2036.

The good news for us here in Australia is that there will now be an on-going realisation that we need to provide for ourselves, as governments worldwide are no longer capable of funding ample retirement incomes for everyone.

But most of us are still floating down the river of denial.

I am sure that “the pension” will remain as the ultimate backstop for the truly poor, but if you own your own home and had a decent education, my feeling is that the criteria to be paid the pension will be framed against you.

We are seeing this already, of course. For example, for a married couple on the pension, when you turn 70 your second car is considered unnecessary, and your pension is shaved.

If you want me to help you prepare for long term financial security, feel free to contact me – Bernard Kelly – anytime. My mobile is 0414 778 518

WHAT ACTUALLY HAPPENED TO THE US HOUSING MARKET

The US housing market collapse had its genesis in 2002, when George Bush took action to allow everyone to own their own home. At the time only 7% of the poor did.

So he had HUD (the government agency for Housing and Urban Development) guarantee loans for new home buyers.

Now at the time there was a national program in place that only required a 2½% deposit and then the banks would lend the balance. So what happened was that property developers “left behind” 2½% of the purchase price as a deposit – in the name of the buyer.

So new home buyers didn’t have to contribute one penny, and then the government agency would guarantee their loans.

This lent to a building and lending frenzy, with Wall Street selling off huge chunks of these “government guaranteed” mortgages.

By the time that HUD put a stop to these games, 22% of the poor had purchased homes. That was in March 2007 when it withdrew its guarantee.

Suddenly all those chunks of mortgages out there didn’t have a government guarantee, and when the financial community realised that many of the borrowers would never be able to afford to pay off their mortgages, these mortgages became virtually worthless (as in America, borrowers are free to walk away from mortgages). Hence the global financial crisis.

And even to this day, across America, there is still in excess of a year’s supply of new homes.

DIVERSIFY YOUR RETIREMENT FUNDS

Nothing is sacred from the claws of a desperate government, as we saw last year in France and in New South Wales and now in Ireland:

Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the Irish government has announced that it will now tax private pension savings.

This means Ireland is now following in the footsteps of a rather ignominious list of nations like Argentina and Hungary attacking private superannuation funds.

New South Wales was a bit more subtle last year when – for similar reasons – it introduced an “anti-fraud” home buyers’ tax – now thankfully being repealed by the O'Farrell government.

The Irish government has decided that the easiest, most concentrated pool of assets to find is accumulated private pension funds.

So - could the government tax superannuation funds in Australia?

Well last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to take retirement funds from the public in order to pay off other debts.

And in the US, funds put aside for government funded pensions have been raided for years and Congress routinely ‘borrows’ from Social Security to make up budget shortfalls

The moral here is to ensure that your retirement assets are diversified.

ON BUYING SHARES …

“June.

“This is one of the particularly dangerous months to speculate in stocks.

“The others are July, January, September, April, November, May, March, October, December, August, and February.”

– Mark Twain 1835-1910

NEXT ISSUE

In our next issue, I’ll keep you up-to-speed with what’s happening with investment properties.

PROFITABLE HOBBIES

You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at
http://www.retirelaughing.com.au/blog/make-money-with-my-hobby/

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.

HERE’S MY BLOG

My blog is at www.retirelaughing.com/blog

I use this for current news – as part of my social network tools

FOLLOW ME ON FACEBOOK

Go to www.facebook.com/propertysuccess

I’M ALSO ON YOUTUBE

www.youtube.com/retirelaughing



Regards


Bernard Kelly www.retirelaughing.com mobile 0414 778 518
Australia’s Retirement Strategist®

“expect to reap an extra $449,999* when you’ll really be needing it”.
PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals

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

A BETTER WEBHOST FOR YOUR WEBSITE

Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to

www.cheapesthosting.net.au

and also

www.valuewebsites.info

Property Strategies 1 May 2011

TODAY’S INSPIRATIONAL QUOTE

"Nobody can go back and start a new beginning, but anyone can start today and make a new ending."

-- Maria Robinson

DIVERSIFY YOUR RISK

One of the problems with the superannuation regime is market risk.

Although the stock market is up right now, recent history shows that there is no guarantee for the future - will it continue to grow, stay up, or decline?

Most of us are exposed to this market risk through our super – especially if we use financial planners (whose incomes are generated by having their clients invest in super).

My analysis is that market investments have their place in most people's portfolios but the problem arises when they are used as the primary instrument to generate retirement income.

What happens when the market is down for an extended period and you are taking capital – as a retirement income - from your portfolio?

You obviously end up in an unfortunate situation where you are withdrawing out a much larger percentage than you intended to before the market downturn, from which you can never recover.

Which is one of the reasons why I suggest having some property investments. They are a diversification away from market risk.

If you would like me to help you reduce your exposure to market risk, contact me – Bernard Kelly – anytime. My email is admin@retirelaughing.com (or just hit your return button, and I’ll phone you back)

4,000 INVESTORS EACH MONTH

There are 150,000 new homes built in Australia each year, and one third go to investors.
That’s around 4,000 each month being purchased by investors for their long term financial security.

Note - the reason why you don’t see such strong figures in the press is that investment properties aren’t generally sold by suburban real estate agents, who report their transactions (substantially only to home owners) to the Real Estate Institute.

Let me know if you want me – Bernard Kelly – to explain how easy it is to tuck an investment property aside for your long term financial security.

My mobile is 0414 778 518 and email admin@retirelaughing.com

“BANK VALUATIONS” EXPLAINED

While the banks are willing to become business partners with property investors – so that you both can achieve something you couldn’t do without the other – their support is not unconditional.

Take “bank valuations” as an example.

Novice property investors – and journalists – often expect a bank valuation to mirror the market price, while in fact a bank valuation is an internal control tool and only reflects what a bank can reasonably expect to recoup should it have to repossess and sell in say two years’ time.
So naturally it’s less than market price.

Banks can also apply conservative valuations should – for example – they want to move away from the total amount that they lend for housing. As happens from time to time.

In a similar vein, the valuation put on a property by an insurance company is above the market price.

In this case it reflects what the insurance company would reasonably expect to pay out should the property – for example – be destroyed by lightning in say two years’ time, plus what they add to cover the removal of the debris.

As you can see, “valuations” are tools the big corporates use for their own purposes. They only loosely relate to the market price.

HAVE HOUSE PRICES STAGNAGTED? REALLY?

House prices across Australia rose 4.7% during 2010, says property research firm RP Data.

Their research shows that there were 212 suburbs around the country with a median house price of $1 million-plus in the December quarter 2010.

This contrasts to 157 suburbs with this median price at the end of 2009, and only 77 in 2005.

Which suggests that house prices continue to increase over time, despite what the daily journalists would have us believe.

IMPACT OF FEES ON YOUR SUPER FUND

It’s instructive to consider the impact of fees on your retirement savings.

For example, if you save $1 000 a month for 40 years and earn an average real return of 5% you will have about $1.5 million.

This is made up of $480,000 of contributions and $1.1m of investment returns.

If your super fund charges only 1% the $1.5m will be reduced to $1.1m - a loss of $400 000! If you’re paying 2% the $1.5 million will be reduced to around $900,000.

In comparison, the costs to manage a property investment come in around 1%.

However when house prices “double every seven to ten years” the growth rate is 9%.

And of course if you had been investing in residential property investments with this return over 40 years, you would now be seriously wealthy.

Fortunately, it’s not too late to start. Even investing in real estate – using the very successful strategy that I share with my private clients – will make a major difference to your ability to enjoy 20-25 years of comfortable retirement.

If you would like me to help you explore your options, contact me – Bernard Kelly – anytime. My mobile is 0414 778 518

WHY MY STRATEGY IS SO SUCCESSFUL

There are quite a number of well researched property investment strategies that offer successful outcomes, and you can get a taste of them when you attend those high adrenaline seminars such as - "We'll teach you ten strategies in three days".

However the presenters at those seminars don't make their money from property investments - no. They make their money from having 200 hopefuls pay to attend, and then sell them books, DVDs and then up-sell into "private exclusive joint venture participations".

Success with property investing comes from concentrating on just one strategy (that you are comfortable with) and refining it continuously.

My strategy works exceptionally well for novice, time-poor investors, who need to substantially enhance their wealth over the next ten years.

If this is you, fell free to contact me (Bernard Kelly) anytime. My mobile is 0414 778 518 or email me admin@retirelaughing.com

SUCCESS AS A LANDLORD

Earn money while someone pays off your mortgage - that's the life of a landlord!
Owning a rental property can be a 'dream come true' if you follow these tips for successfully managing your investment.

1. Wear your business hat
Treat the management of your property as a business not a hobby. Start with a business plan and organise your operations professionally, with separate bank accounts and a bookkeeping system. Surround yourself with people that can help you make the right decisions like a good accountant and property manager.

2. Screen your tenant
You might be anxious to get a paying tenant into your property but don't be tempted to race ahead without first checking their credentials. Follow up on referees, past property managers and all the details provided by the applicant. Be familiar with your state's laws regarding leases and ensure that you use an appropriate lease form for your state.

3. Prepare for repairs
Attempting to save money by skimping on repairs and maintenance will only end up costing you more and risking legal liability in the long run. Conducting repairs quickly and keeping the property in good condition will improve the value of your asset and keep your tenants happy (and paying!).

4. Rainy day funds
Although you hope your property will always be rented, you need to be financially prepared for a worst case scenario of months with no tenant paying rent. Before closing on a property ensure you have done a cash flow analysis to show you can cover mortgage repayments for this or other unforseen problems like interest rate rises, the need for major repairs or an unexpected drop in your income. Whether it's 'cash in bank' or a line of credit on your home loan (contact your mortgage broker for more information), you need to know you have sufficient funds to manage these situations.

5. Know your tax
Find an accountant who understands property and can structure your business affairs to maximise your personal tax situation. Be familiar with what is tax-effective and what is not. A depreciation schedule for example can save you thousands of dollars in tax, by enabling you to depreciate items and claim a tax deduction against your taxable income.

6. Take immediate action
Don't delay taking action when tenants don't pay rent or continually slip behind - you want to send a strong message that you have a business to run. Make sure you follow the step-by-step eviction process required under Tenancy Law.

7. Manage your risk
As outlined in the article opposite, landlord protection insurance is an important part of successfully managing your investment.

Acknowledgements: Greg Carroll, MTA Finance Group, Brisbane

PROFITABLE HOBBIES

You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at
http://www.retirelaughing.com.au/blog/make-money-with-my-hobby/

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.

HERE’S MY BLOG

My blog is at www.retirelaughing.com/blog

I use this for current news – as part of my social network tools

FOLLOW ME ON FACEBOOK

Go to www.facebook.com/propertysuccess

I’M ALSO ON YOUTUBE

I think I have now loaded up 40 educational videos for you

www.youtube.com/retirelaughing



Regards


Bernard Kelly www.retirelaughing.com mobile 0414 778 518
Australia’s Retirement Strategist®

“expect to reap an extra $449,999* when you’ll really be needing it”.
PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals


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

A BETTER WEBHOST FOR YOUR WEBSITE

Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to

www.cheapesthosting.net.au

and also

www.valuewebsites.info

Retirement Planning 15 April 2011

THE COST OF LIVING Here, I’m not thinking about the cost of living index and day-to-day expenses, but rather about health care costs. While we have some control over day-to-day expenses (we can drive less, we don’t have to go to Europe for holidays) the same doesn’t apply to health care. Once retired, we’ll feel that health care impact on two fronts – insurance premiums and out-of-pocket costs. Now my wife and I are in excellent health, but visits to the doctor still cost us the excess. So let’s say around $60 per month. Then prescriptions and incidentals at the chemist cost around $200 per month, and our basic hospital cover (even with a $250 excess) is $250 per month. That’s in excess of $6,000 pa! The bottom line is – as I can’t afford to retire, it’s just as well I enjoy my career. If you would like me to help you explore your options for 20-25 years of comfortable retirement, feel free to contact me – Bernard Kelly – anytime. My mobile is 0414 778 518 HOW TO FIND A RETIREMENT JOB If you intend to remain engaged with society after you retire (which today probably means only you’re in your late sixties and leaving a long term job) and you’re thinking about working after “retirement”, the key question to ask this: If you had to earn only 33% of what you’re earning now, what would you choose to do? Would it be a different job, would it be a different job description, would it be a different career, would it be a different field? Suddenly the possibilities become endless. WHY THE PENSION WILL BE SQUEEZED For some time now I have been saying “don’t plan to rely on the pension” based on the premise that the government can’t afford to pay us all the pension as it did for our parents. Here are the statistics: In 2009-10, the Australian government spent fully one third of the federal budget – around $109 billion - on social security and welfare payments. That was equivalent to 8.4 per cent of gross domestic product. In contrast, during the early 1970s, the welfare state was 3.8 per cent of the total economy. Naturally, over time, welfare spending is driven by an increase in the number of recipients, including age pension recipients. However, as Ken Henry , the then Treasury Secretary, told a Whitlam Institute symposium in November 2009, the proportion of income-support recipients that are age pension recipients has fallen from around 75 per cent in 1971-72 to around 50 per cent, due to expanded support for sole parents and people with a disability. My contention is that – as the government wrestles to control spending on social security and welfare – the aged pension will also be subject to belt tightening. STOCK MARKET VOLATILITY MAKES IT IMPOSSIBLE TO PLAN FOR RETIREMENT- SURVEY March 8, 2011, Washington, D.C. - A new public opinion research report (with implications for Australia) finds that an overwhelming majority of Americans believe that stock market volatility makes it impossible to predict retirement savings. Faced with an uncertain economy, historically low yields on fixed income, skyrocketing medical costs, the potential of rising inflation, and the looming bankruptcy of Social Security and Medicare, many US workers with are rightfully concerned about their prospects for a comfortable retirement. And many are coming to the realisation that longer life expectancies mean that people may have to plan to spend as much time in retirement as they did working. Nearly three‐quarters of Americans believe that stock market volatility makes it impossible for the average American to predict how much money they will have in their nest egg when they retire, underscoring their concerns about flaws in the current US retirement system. The research also finds that Americans remain highly anxious about their ability to achieve a secure retirement, view retirement as simply surviving, and believe that the government is disconnected from Americans’ retirement anxiety. These findings are contained a new report, “Pensions and Retirement Security 2011: A Roadmap for Policymakers,” released by the National Institute on Retirement Security. The full report is available at http://www.nirsonline.org/. About NIRS - The National Institute on Retirement Security is a not‐for‐profit, non‐partisan organization established to contribute to informed policymaking by fostering a deep understanding of the value of retirement security to employees, employers, and the economy through national research and education programs. It is based in Washington DC. VISUALISATION CAN HELP WITH PLANNING We need to adapt, and think how different retirement is going to be for we baby boomers. And we need to employ new tools to understand this new environment. Remember it was Alvin Toffler who said “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn and relearn”. So let’s explore Visualisation. Visualization is a psychological technique and it can play a tremendous role in our financial planning. It’s something humans are inherently good at, says Farnoosh Torabi author of “Psych Yourself Rich”. He interviewed Dan Ariely, author of the New York Times best-seller “Predictably Irrational” and Professor of Behavioral Economics at Duke University. Ariely says “we do more vision more hours of the day than we do anything else and we’re good at it.” “What’s more,” says Ariely, “when it comes to visual illusions, we can see the mistakes.” Visualization will enable your whole body and brain to understand how this accomplishment—in this case retirement—may (or may not) resonate in your life. To visualize retirement clearly, you must be really honest with yourself and imagine all the different scenarios that could play out. Ask yourself the following questions: • Will I need to continue to earn money? • How do I envision working in my 60s? Starting a business? Currently, baby boomers and those over the age of 60 account for more than 50% of small business owners in the USA. • What will I do in retirement? Where will I live? • What kind of downsizing, if any, am I comfortable doing (e.g. reducing fixed expenses, moving to a smaller home with a smaller mortgage, selling clutter, going from two cars to one)? • Who will take care of me if I become sick? Here are some things we can all visualize with some certainty: • Living a long time. There is a good chance you (and your partner) will live longer lives than the generation before you. That’s why most financial advisors now recommend that clients plan for a 30-year retirement. With life expectancies on the rise, it’s probably safe to assume that number will increase down the road. • Inflation. While increases in the cost of living have been modest for the past several years, that trend will likely end soon. Experts predict that an inflationary period may follow in an economic cycle like the one we are currently experiencing. • A life without the pension. With the government under all manners of budgetary pressure, it is illogical to believe that the pension will be untouched. Planning for you retirement without the pension will take the uncertainty out of your future. Acknowledgements - the original article appeared at Credit.com. A WORTHWHILE HOBBY A friend of mine, in his mid-sixties, started to write a book on “the history of finance” as a retirement project. But has now switched to “the history of malt whiskey”. Apparently the research is easier – the distilleries send him their histories all written for him to cut and paste – but the big bonus is that some of them have sent him six bottles “to assist with the evaluation of the product”! US BABY BOOMERS CONCERNED ABOUT RETIREMENT People are scared. Embarrassed. Ashamed. They don't want to tell anyone. How could it be that everyone else but them seems to be on the right financial track heading into the retirement tunnel known as the post-work years? The answer: everyone else isn't – if a recent US survey has any relevance for Australia. Only 11% of Americans are deeply confident that they're financially prepared. 44% of Americans born between 1946 and 1965 (the baby boomer years) are not confident that they'll have enough money to live comfortably in retirement, according to the Associated Press-LifeGoesStrong.com poll. Source: http://work.lifegoesstrong.com/retirement-poll 5 April 2011 PROFITABLE HOBBIES You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at http://www.retirelaughing.com.au/blog/make-money-with-my-hobby/ At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage. HERE’S MY BLOG My blog is at www.retirelaughing.com/blog I use this for current news – as part of my social network tools FOLLOW ME ON FACEBOOK Go to www.facebook.com/propertysuccess I’M ALSO ON YOUTUBE www.youtube.com/retirelaughing Regards Bernard Kelly www.retirelaughing.com mobile 0414 778 518 Australia’s Retirement Strategist® “expect to reap an extra $449,999* when you’ll really be needing it”. PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals 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 A BETTER WEBHOST FOR YOUR WEBSITE Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to www.cheapesthosting.net.au and also www.valuewebsites.info

Property Strategies 1 April 2011

JOURNALIST WANTS TO CHAT WITH YOU

Caroline James, a journalist with the Australian Property Investor magazine, wants to interview investors who started their portfolio of residential investment properties when in their 50s.

If you would feel comfortable sharing your story in a respected national publication, Caroline would be happy to document it.

Phone her on 0409 580 315 or email carolinejames@internode.on.net

and remember to say something nice about me!

TODAY’S INSPIRATIONAL QUOTE

"The people who get on in this world are the people who get up and look for the circumstances they want, and, if they can't find them, make them." -- George Bernard Shaw

HERE’S MY PROVEN STRAGEGY

Developing your portfolio of investment properties is no different from developing any other form of business - the first thing to focus on is the cash flow.

And you will get the most secure i.e. regular, cash flow from a succession of long stay tenants.

And these are likely to be a young couple with kids in primary school (in our culture, the parents don’t want to break their children’s friendships by moving school).

Now that you know who is the ideal tenant, you give them what they want – which is a four bedroom + ensuite family home, with aircon and a double garage, in a family suburb.

This accommodation itself probably represents 30% of your long term success in property investing (as it will give maximum depreciation benefits and will attract an on-going series of ideal tenants, without the needless costs of on-site managers, body corporate levies and sinking fund fees – and when you exit, buyers will be families, not investors).

The next question is – where should this investment be best located? And the answer is: the south-west suburbs of Brisbane.

Where there are clusters of strong economic zones nearby – where there are jobs for your tenants.

Rents in Greater Brisbane are relatively higher than for any other capital city, and land tax in Queensland is the lowest, but the principal reason for the south-west suburbs of Brisbane is because (of the 35+ regional markets across Australia) this location is acknowledged to grow at the fastest rate over the next ten years.

The geographic location probably represents 50% of your long term success in property investing.

Then the packaging – the legal ownership structure, the funding package, the insurances, the asset manager etc will represent the final 20% of your long term success in property investing.

If you don’t think that you’ll have enough for 25-30 years of a comfortable retirement, contact me – Bernard Kelly – and let me help you explore your options.

BANKS AND YOUR 55TH BIRTHDAY

Since 1 July 2010, it has become slightly more difficult to borrow when you pass your 55th birthday.

When you are starting you portfolio of investment properties, it is normal to borrow 80% of the value of the investment (to avoid the cost of mortgage insurance) and then do whatever else you need against the wealth “hidden under the floorboards” of the family home.

However, with the new and more conservative guidelines, the banks are now required to satisfy themselves that you will be able to repay the loan on your family home before you reach 70.

This is normally not an issue for most first-time investors, however it can adversely impact on anyone self-employed, whose accountant has suggested that attempt to minimise their income for the purpose of saving on tax.

Of course, once you have a portfolio started, the growing equity in the additional properties will make it easier to expand on the number that you own.

If you have any queries, feel free to contact me – Bernard Kelly – anytime. There is normally a solution to such issues.

SOME PROBLEMS USING SMSFs

Accountants, solicitors and now financial planners are very keen to market Self Managed Super Funds (the rationale is of course that they earn fees from this new product) however for a property investor, there are real problems.

The background is that SMSFs became attractive to wealthy investors who had a threshold of say $1,000,000 in super. Depending on their fund, annual fees would be say 2% - that’s $20,000 – or perhaps 1% (still that’s $10,000).

Now if you manage your fund yourself, there would be no management fees, and other fees e.g. from your accountant, may only come in at say $5,000. So the rush began into SMSFs.

However, the super that we are talking about here was invested into equities, and there was no debt involved.

But remember that to put an investment property into a SMSF, the average person needs to borrow most of the purchase value from a bank.

So some hybrid mortgages have emerged, but of course hybrids come with rules.

One rule for SMSFs is that the funding for an investment property is non-recourse, so banks will only lend around 65% of their valuation, and consequently the cash deposit is far greater than the $1000 normally required.

Another problem is that you can’t access the increased equity in an investment property held inside a SMSF to increase your portfolio, as each property inside a SMSF can only be used as security for its own mortgage.

So my conclusion is that it’s better – as a generalisation of course – to continue as we have always done i.e. acquire investment properties in your personal names, take advantage of having that extra cash every payday (from a negatively geared investment) and never sell.

SMSF advocates will tell you that you will be exposed to capital gains tax (when you sell).

However I say that if you’re running your portfolio as a business, should you need extra cash you would just put a line of credit against your investments.

Why would you ever sell? SMSFs are – to my mind – still an unproven arrangement for property investors. (another issue is – of course – that accountants, solicitors and financial planners know nothing about the determinates of an outstanding property investment)

WHY ARE SO FEW OF US WEALTHY?

Why are you not wealthy already?

I have looked for the answer to this for years, but only in the past few decades a field of inquiry has emerged called “behavioural finance”.

This study of human behaviour has shed new light on how we make investment choices.

The problem appears to be that the human mind is hard-wired to participate within the group.

This was a valid approach for society to take for zillions of years, up until the economy developed to such an extent that it allowed individual self interest (and entrepreneurs) to flourish.

But we’re only talking here of the past 200 years.

Today we are busy people in a complex world.

We cannot possibly give in-depth consideration to every choice. So we revert to type - the brain takes a shortcut in evaluating our choices. As a consequence, we “follow the herd”.

The significance of this is that – for anyone concerned about having enough for 20-25 years of dignified retirement – you’ll have to do something totally different to the herd.

Which is why my (very successful) investment approach is such a perfect fit for you. It looks solely at the numbers, and ignores any emotional attachment to what the vast bulk of the community thinks is “the obvious way to go”.

My advice – don’t listen to the herd. Instead, contact me – Bernard Kelly – anytime. My mobile is 0414 778 518

RBA “NOT REALLY CONCERNED” ABOUT HOUSE PRICE COLLAPSE

The Governor of the Reserve Bank of Australia - Glenn Stevens said that he wasn't really concerned about the prospect of a collapse in the country's housing market.

"I think there are significant issues but they are as much social as economic," Mr Stevens said when questioned about the booming housing market following a speech in London on 8 March.

Mr Stevens told an audience at an event organised by Australian Business in Europe, a business forum, that the housing market wasn't "top of his list of worries".

By way of explanation, he said the ratio between buyers' incomes and house prices hasn't changed much in 10 years.

MIDDLE INCOME BRITS FACE MASSIVE DROP INCOME DROP

A study that has parallel implications for Australia shows that almost two-thirds of people living in Britain today are likely to see a 60% drop in their income when they retire over the next 40 years and a plummeting quality of life.

"The UK has a distinct problem with middle-income earners who are failing to save enough and are likely to find the drop in income during retirement unexpected and unacceptable," said Paola Subacchi, one of the report's authors.

The report says the problem is worsening because of a shift from defined benefit (DB) pension schemes to defined contribution (DC) schemes, which do not guarantee a predetermined retirement income.

"Furthermore, the recent recession has highlighted how vulnerable wealth and pension funds are to economic shocks and reduced annuity conversion rates," it adds.

The 15 million households earn between 18,000 and 44,000 pounds each and represent roughly 35 million people, according to the study by London's Chatham House think-tank.

Their incomes will take the biggest hit from retirement compared to the lowest and highest 20% of earners.

Middle-class Britons' meagre savings mean they will have to rely heavily on the relatively small state pension, which "only just ensures a minimum standard of living", Chatham House said.

"Some may even slip into poverty," the report adds

Source: Reuters 10 March 2011

PROFITABLE HOBBIES

You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at http://www.retirelaughing.com.au/blog/make-money-with-my-hobby/

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.

HERE’S MY BLOG

My blog is at www.retirelaughing.com/blog I use this for current news – as part of my social network tools

FOLLOW ME ON FACEBOOK

Go to www.facebook.com/propertysuccess

I’M ALSO ON YOUTUBE

You can see now about 40 short videos that I've uploaded on retirement planning and property investing.

www.youtube.com/retirelaughing

Regards Bernard Kelly www.retirelaughing.com mobile 0414 778 518

"expect to reap an additional $449,999* when you'll really be needing it"

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

PPS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals

A BETTER WEBHOST FOR YOUR WEBSITE

Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to www.cheapesthosting.net.au and also www.valuewebsites.info

Property Strategies 1 January 2011

“expect to reap an extra $449,999* when you’ll really be needing it”.


QUOTE FOR THE NEW YEAR

"This is as true in everyday life as it is in battle: we are given one life and the decision is ours whether to wait for circumstances to make up our mind, or whether to act, and in acting, to live."

-- Omar Bradley (General, US Army, WW11)

TESTIMONIAL

"Thank you very much Bernard. We do appreciate what you have done for us." Ray Smuts, Western Australia April 2008

MY SUCCESSFUL STRATEGY – IN A NUTSHELL

For a successful investment, my approach is “least in, most out” and when you look at the recipe it is

40% of success is location

30% of success is the product (i.e. the accommodation)

20% of success is the packaging (the professional support that you need).

Location is easy to determine – if you know what to look for. It boils down to a) fastest expected growth b) higher rents c) lowest land tax. The answer is the south-west suburbs of Brisbane.

The product you need must be capable of attracting a succession of long stay, quality tenants i.e. young couples with children in primary school. And what they want is a four bedroom family home with air con and double garage in a family suburb. This product also provides maximum financial benefits to the investor.

The third ingredient – the packaging – relates to the funding strategist, the quantity surveyor, the legal ownership structure, a specialist property accountant, the insurance broker, the solicitor and an estate planning specialist, and the asset manager.

I put my private in touch with all these experts, and my practice is based on long term relationships, repeat business and personal referrals (and so I can’t afford to let the very first investment that I share with you go sour).

Feel free to contact me – Bernard Kelly - anytime. My mobile is 0414 778 518

Or you can see all this live at www.youtube.com/retirelaughing


WHY YOU SHOULD INVEST NOW!

During 2010, nursing homes in Australia opened 5,643 new beds.

Actually 8,140 beds were needed, but the government wouldn’t subsidise that many.

Now with the surge of people currently moving into later life, there will be a substantially increased demand for beds – and if you can’t afford it, they won’t let you in.

Just one investment property could make all the difference to you. Let me help you explore your options. Contact me – Bernard Kelly – anytime. My email is admin@retirelaughing.com



USE YOUR SUPER TO INVEST IN PROPERTY

If you have around $250,000 in super, and are still working, you can now use that to invest in property.

If you are in late career, you may not be able to accumulate more than $350,000 in super before you retire, and we all know that will be totally inadequate for 20-25 years of comfortable retirement.

Using your super is really no different to using the equity in your own family home to boost your retirement funds via property – money in super is also untapped wealth that you have already accumulated.

Now you no longer have to fear penury in your retirement.

The reason why you need around $250,000 in your super is that if the “bank valuation” comes in at 90% and then if they only lend 60% of that for your investment property (because it’s a non-recourse commercial loan) you’ll need virtually all of that to make up the difference.

If you would like to learn more about using your super for property investment, contact me anytime. My email is admin@retirelaughing.com



RETIREES SPEND SUPER TO REPAY DEBT

Avoid this tragedy.

A recent survey by Industry Super Network (published 18 November 2010) found that large number of retirees across all levels of retirement savings use a significant part of their payout for immediate consumption, mainly to pay down debt.

26% of respondents indicated that their debts were greater than one quarter of their retirement savings.

The research “Retirement Savings and Longevity” by Dr Sacha Vidler also found that more than one third of retirees said that they would struggle to make ends meet if they had nothing other than their super.

Consequently around half of those who are already drawing on their super continue to work.

ISN represents five major industry funds - AustralianSuper, Cbus, HESTA, HOSTPLUS and MTAA Super – so these results are significant.

• The solution is to develop a portfolio of property investments – using the conservative and traditional strategy that I share with my private clients. If you would like me to help you explore your options, contact me anytime on admin@retirelaughing.com


AVOID THIS TRAGEDY (2)

From “The Australian Financial Review” 14 February 2008

One survey of 1000 respondents - by the Senior Australian Equity Release Association of Lenders - found that one third of baby boomers expect their money to run out between 5 and 10 years into retirement.

One third (perhaps the same one third) thought it most likely that they will need to sell their family home, and downsize, for the purpose of funding daily living expenses.

Another survey by Retail Finance Intelligence found that one in five current retirees (that’s 20%!) are still repaying their mortgages, and of those approaching retirement, one third expect to still have a mortgage when they do retire.

Comment: A logical outcome of those retirees with mortgages is that they will need to tap into their superannuation to repay your mortgage, or sell. Because you can’t repay a mortgage when you don’t have a decent income.

If you feel that you won’t have enough for 20-25 years of a dignified retirement, phone me immediately 0414 778 518



MY COMMITMENT TO YOUR FINANCIAL SECURITY

My private clients are just like you – ordinary people looking for a simple and secure way to invest in property.

I offer research, experience, logic, and efficiency, and take the hassle out of the process for you.

My mission is dead simple: to give you all the free education you need in one newsletter so you can begin the process of building your property investment portfolio -- whether or not you purchase property through us.

I am constantly chatting with interesting people, and every so often someone says “that sounds very logical, so just send me the paperwork”.

Life is good to me, and on the basis that we only take action for one of two reasons (to increase pleasure or reduce pain) I can probably make yours better too.

If you go to the bookshop at the airport, you’ll see that there are perhaps 18 books there on investment property, each offering a different strategy. As a generalisation, I’d say they’re all OK, but that the strategy that I share with you is far better. Those authors are writing to make money – and that is a very different goal to giving you the best advice.

If you want to chat with me anytime, feel free to phone 0414 778 518.


“BANK VALUATIONS” EXPLAINED

First time investors often get confused that a “bank valuation” has some close affinity to market value.

There is some correlation, of course, however a “valuation for the purposes of lending” is more often a banker’s tool to limit their exposure to a certain class of assets.

It’s all in the definition – much like when a dam is said to be “full” which doesn’t mean that a dam cannot hold more water, rather it means that there is adequate storage for 1,000 days of normal usage.

In the wake of the Global Financial Crisis, banks now have tighter capital requirements under the Base III regulations. Which means they don’t have as much money to lend as previously.

Which goes somewhat to explain why banks have different valuation and lending criteria for assets such as commercial property, properties being bought by first home buyers, investment property being bought by individuals, investment properties inside SMSFs etc etc.



BUYING PROPERTY IN THE USA

From time to time, people ask me about buying property in the US.

Now I am no expert in that field, but it appears you need a Limited Liability Company to be your purchase vehicle, which will obviously require ongoing annual accountancy and filing fees.

Then the tax consequences appear to be so adverse for an Australian resident - either an individual or SMSF (which are invisible to US authorities) - that any US property purchase is likely to be - from day one - a really poor investment. But to clarify this, you'd best ask an international tax expert from a major accountancy firm for a professional opinion on this point.

And then, as non-residents investors can only effectively buy for cash, you can't use any increased equity to expand your portfolio. There is no way use leverage to grow your portfolio using a mortgage if you can't access the equity. So you’ll need the full purchase price in cash each time. Remember, we want capital gains, not income today.

Furthermore, when the time comes to exit, who will buy? Bargain-priced homes are only available in depressed areas, and that location will always be a depressed area. If the locals aren't buying today, why do you think there will be affluent buyers for that location in the future?

Finally, consider what the exchange rate will need to be when you exit. You may be buying at parity today, but to extract a worthwhile capital gain, you would be hoping it will be around 80 cents. But if the Americans have to keep devaluing their currency to compete against low cost imports to boost their economy, you may be whistling into the wind waiting to see 80 cents again.

The very successful investment strategy that I share with my private clients is clean and simple, in comparison.


PROFITABLE HOBBIES

You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at
http://www.retirelaughing.com.au/blog/make-money-with-my-hobby/

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.

HERE’S MY NEW BLOG

My new blog is at www.retirelaughing.com/blog

I intend to use it for current news – as part of my social network tools

FOLLOW ME ON FACEBOOK

Go to www.facebook.com/propertysuccess

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


“expect to reap an extra $449,999* when you’ll really be needing it”.

Property Investing Newsletter 1 Dec 2010

MY SUCCESSFUL FORMULA EXPLAINED






To enable you to boost your referral business - you'll remember that I'll pay you $5000 for each successful referral - I've had a video professionally done to explain the very successful formula that I share with my private clients.


The basis of the formula (wholly explained in the five minute video) is:

40% Location (and how I determine which - of the 35+ regional locations across Australia - should outperform all others over the next ten years)

35% The Product (i.e. the style of accommodation)

25% The Packaging (i.e. the funding, the legal ownership structure, the management agent, the insurances, your tax credit back each payday, the immediate update to your wills etc etc)

Total 100% - complete satisfaction


Clink this link or copy and paste: www.youtube.com/retirelaughing

Feel free to share it with family, friends, and colleagues - and let me know IMMEDIATELY if they show any interest.


regards

Bernard Kelly 0414 778 518 http://www.retirelaughing.com/
Australia's Retirement Strategist

Retirement Strategies 15 May 2010

I’M LOOKING FOR REFERRALS

“We are grateful that, one day, you will be using our services.

“If we prove to be exceptional, would you refer us to three of your contacts?”

I’m Bernard Kelly 0414 778 518
Australia's Retirement Strategiest®


VOCATIONS AFTER RETIREMENT

I was impressed with the website www.Enjoy-Retirement-Jobs.com

It offers a kaleidoscope of concepts for anyone thinking about the final third of life, and it’s not just about jobs.


HOW THE PENSION WAS DESIGNED

When Bismark introduced the pension into Germany in the 1860s, life expectancy was 57 and the pension entitlement age was set at 65.

It was obvious that the pension wasn’t to be paid to everyone, only long term survivors.

Applying the same logic today, when life expectancy is 79 (males) and 84 (females) males would be entitled to the pension at age 87 and women at 92.

Which may explain in part why they are now intending to raise the pension entitlement age – but only very slightly - in all developed countries.


PROFITABLE HOBBY – OWN A FOOTBALL CLUB

Anthony Hatton owns a football club – Players Football Club in Canberra.

It’s really “a business on the side” as it only operates for half the year, and only on weekends.

As a football club it is affiliated with the local league, but it’s really a training academy for boys and girls aged 3 to 12. And so there are no volunteers in this football club, as everyone is a paid part-time employee.

Anthony says “there’s millions of little kids out there, and the parents are happy to pay modest fees.

“All my family is involved and it certainly keeps me young”, he says.


IF YOU’RE IN DEBT, FORGET RETIREMENT

Of course, I’m really only thinking of really serious “bad debt” such as car loans and credit card debt.

And I should probably add some “indifferent debt” into this mix – such as a mortgage on your family home. This is indifferent debt because – while it’s is debt and will need to be repaid eventually – the asset that it’s attached to is expected to increase in value over time, and of course without it, you’d have to be paying rent.

The significance of both bad debt and indifferent debt is that you need an on-going source of personal income to pay them off. So you can forget about retirement.

Of course, if you have “good debt” – such as on you investment properties – that OK with me, as soon (If not already) the increasing rents will eventually make them cash positive.



THE RETIREMENT FANTASY

Most of us will never truly be able to retire as our parents did.

Because we don’t have enough for 20-25 years of comfortable retirement, we will transit from our current career into another, as we will need to supplement our income for many years to come.

Here's why:

1. After the 15% tax, our 9% compulsory superannuation contribution is really only 7.6%. And historical rates of return on super assets is only 7% (before fees).

Now to be comfortable, we’ll need an (inflation protected) income in retirement of say $50,000, and for this we’ll need a nest egg of $1,000,000.

Do the maths. Apply these statistics to someone retiring today, and who saved 7.6% of their wages for the past 45 years. There’s no way that could have $1,000,000 today. And it will be – relatively - the same going forward for someone entering the workforce today.

2. Australia’s welfare and pension system cannot continue in its current form. With the growing aged population, and spiralling medical costs, something will have to give with this program. Under almost any scenarios, one of two things must happen: benefits must be cut or taxes must be raised (or some combination of both).

3. Medical and healthcare costs will continue to spiral – and will become rationed to those on government welfare. New treatments that give us a better lifestyle are to be welcomed, but scientific advances require new support systems when delivered to those in need. And the cost of new drugs continues to rise as well, putting even more strain on the Pharmaceutical Benefits Scheme that subsides the cost of many drugs.

4. Finally, people are living longer, requiring greater savings for retirement. In the 1950s life expectancy in Australia was just 67 years for men and 73 for women. Today, the figures are 79 and 84.

SOLUTIONS

So enough with the doom and gloom, is there a solution if you are in late career and don’t have enough?

The simple answer is YES

Contact me – Bernard Kelly – anytime on 0414 778 518 and I’ll help you explore your options.


MANY VARIABLES IN RETIREMENT PLANNING

As we are likely to be retired for 20-25 years, planning this far into the future is not a particularly easy process.

Some of the variables would include lifestyle/family goals, longevity, future income tax rates, investment returns, and the impact of inflation.

Let's quickly review the basics of these variables as they relate to your retirement plan.

Lifestyle Goals

Would you like to travel? Own a summer home and a winter home? How expensive are your hobbies? These questions and others like them are necessary to help create a budget for your specific retirement needs.

Longevity

How old were your parents when they died? What medical conditions did they face in old age? Attempting to gauge how long we're going to live in retirement is a task that's becoming more and more difficult. Medical advances have led to later “estate events”, however hospital and medical costs might be enormous along the way. But we need a end date for our planning, so just assume that you'll live to age 100.

Future Tax Rates

Since we can only spend our "after tax" income, and various taxes will be there during our retirement, we’ll have to build them into our calculations. However, as we can’t predict what governments will do, just assume that 30% will be a good approximation.
Investment Returns

The long-term 10 year moving average return for superannuation is 7%. Of course in some years it is higher, and we also know that in recent years it has been zero or less. My best advice is to be counter-cyclical i.e. in the boom years take it all out and put it into cash, and then when the journalists are wailing and gnashing their teeth, jump back in.

Inflation

Loss of purchasing power caused by rising prices must be included in any retirement plan. Which is why I favour investment property because rents rise to combat inflation.
Family Constraints

Who will care for you?

Who will care for your children and your parents? Your answers will require you to put a dollar amount beside this line item.

So, to summarise

While the future is unknown, we do know that life will go on, some of our investments won’t work out as intended, interest rates will fluctuate, politicians will fiddle with taxes, and inflation and deflation will fight it out. One thing, however, is certain: we will retire someday.

PAY FOR A CONSULTATION

Over the years, various people have wanted to pay me for this service.

If you are similarly incliened, feel free to go to my membership site www.retirementstrategies.net.au and pay $110 for a full membership



HOST A WORKPLACE SEMINAR

You probably know many people who need my experience and expertise right now.

Here’s the deal – you invite a few people to a lunch or after-work seminar, and I’ll present Retirement Strategies for Employees.

I’ll pay you $150 for your expenses, and a further $1000 for every participant who has me share an investment property with them.

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

Retirement Strategies 1 April 2010

an investment property under construction for a private client (right)



WILL HOUSE PRICES FALL?


A) The ANZ Bank doesn’t think so:

The December 2009 issue of the ANZ Bank’s “Australian Property Outlook” was unequivocal – the housing shortage is here to stay and will reach unprecented levels.

The underlying demand for new houses will remain around 200,000 for the next few years, but completions will remain around 150,000.

So each year the shortfall is the difference – 50,000 dwellings.

The cumulative impact will be a shortage of 600,000 dwellings by 2015 with the obvious outcome that house prices and rents will continue to rise.

B) The RBA doesn’t think so

“Over recent years the rate of increase in the number of dwellings has been below the average of the past 50 years” said Dr. Philip Lowe – Deputy Governor at the Reserve Bank of Australia - at the conference of the Urban Development Institute on 10 March.

“In contrast, the rate of increase in the population growth has been around the fastest in 50 years”.

He went on to explain that the continuing escalation in the resources boom – especially now that India is adding to demand for Australia’s minerals – will mean that the national shortage of manpower will prevent any catch-up in the housing sector any time soon.

Consequently he expects that house prices will rise sharply over the next few years – notwithstanding the impact of forecast higher interest rates.

If you are in your 50s, and probably still with a mortgage on your family home, contact me – Bernard Kelly - anytime so that I can help you neutralise that mortgage via the very successful investment strategy that I share with my private clients. My email is admin@retirelaughing.com


“DO YOU RECOMMEND 100% PROPERTY?”

Recently I was asked “because you are so negative about superannuation, are you suggesting that we should be 100% invested into residential property?”

The answer is NO – however here's what I think: we all have to understand the simple statistics of what superannuation can achieve, and I think all of us need develop an understanding of risk. I know that's a lot of thinking, but, seriously, that's what we need to do.

Smart retirement investing isn't a matter of sitting back and letting the managers of your superannuation fund invest on your behalf.

It's about building a diversified investment portfolio, specifically one that gives you a reasonable shot at getting you through retirement. And if you’re only into superannuation, you’re exposed to substantial risk – like we saw in the recent meltdown in the stock market.

So a proper balance means a mix of compulsory superannuation funds and property that not only can deliver the growth necessary to build a nest egg large enough to sustain you through a retirement that could very well last 20-25 years, but also provide decent protection against risk.

So to minimise risk, we need to diversify.

And as you are already into compulsory superannuation, you need to diversify. And the best product for that is not commodities, or gold, or anything exotic.

The best product for this purpose is old fashioned, and simple, residential real estate.


THREE REVIEWS INTO SUPERANNUATION

The government is finally admitting that most of us won’t have enough super for 20-25 years of a comfortable retirement.

This year there will be three – yes three – reports that will lay bare the inadequacies of the superannuation system.

Firstly there is the Henry review of the tax system, then the Cooper review into the structure of superannuation, and finally there is the Ripoll inquiry into the financial planning industry.

I say “the sooner the better”


OUTER RIM REAL ESTATE PERFORMS BEST

According to data compiled by RP Data and published in mid March, it has been the lowest priced suburbs that have performed the best over the past ten years.

These suburbs are affordable to first home buyers, as their entry cost is lowest.

''Interestingly, the analysis revealed that affordable suburbs witnessed the strongest growth over the decade,'' RP Data said in a release.

13 of the top 20 performers still have a current median price below $300,000, while 18 of them are below $400,000.

And of course, the outer rim of Brisbane – but only around the south west suburbs – offers the best expectation (of the 35+ regional markets) of substantial financial gains with the lowest risk. And of course rents are relatively higher in Brisbane than anywhere else, and land tax in Queensland is the lowest for residential property investors.

The selection of the product i.e. the house itself, provides 60% of your success. The packaging that we provide generates the other 40% of your successful outcome.

HOW WE SUPPORT OUR PRIVATE CLIENTS

At retirelaughing.com, we use research methodologies and due diligence processes to identify growth markets and how best to package residential real estate investments.

Of course, some clients have preconceived ideas about a desired location (usually somewhere they know, and where they can drive by occasionally) but research shows they most probably will generate greater returns and minimise risk by investing in a different product, and probably in another of the 35+ regional property markets across Australia.

The key criteria we looks at when assessing a property investment are the ideal tenant, the style of accommodation they require, relative rents, land taxes, economics and employment, population and demographics, infrastructure and government spending, and the balance between supply and demand.

This covers perhaps 60% of the ingredients for a successful investment.

The other 40% of success comprises the packaging i.e. the funding, the ownership structure, the insurances (both for the asset and also landlord rent risk insurance) the quantity surveyor’s report, a specialist property accountant - to get your tax back every payday – estate planning, powers of attorney and the asset manager.

We focus on your upcoming retirement. So we won’t be recommending the latest magic solution – whatever it is this month – with its associated toxic fees. Our solution is not complicated, and has proven itself over decades.

If you would me to help you explore your options, contact me – Bernard Kelly – anytime. My email is admin@retirelaughing.com


SAD FACTS ABOUT RETURNS FROM SUPER

In the debate between the industry funds and the private funds about embedded fees for financial advice, the research report prepared by Supermonics for the Industry Super Network (ISN) - representing the industry funds - cites Australian Prudential Regulatory Authority data showing a 3.6 per cent annual return for retail funds and a 5.5 per cent return for industry funds over the past 13 years.

3.6 per cent and 5.5 percent!

This result is only slightly better than bank deposits, which have virtually zero risk.

Back in 2003, it was the same sad story. Back then, the Australian Prudential Regulation Authority, said that, adjusted for risk, the average return on the profit-motivated retail superannuation funds was NEGATIVE.

Imagine if you had purchased a residential investment property in 13 years ago. Your income would have been around $40,000 and you would have paid out of your own pocket around $8,500 for the investment – priced at $150,000.

If that investment property is now worth around $400,000, it doesn’t take an actuary to realise that an outlay of $8,500 that returns a gain of $250,000 over 13 years far exceeds a return of 3.6 per cent or even 5.5 per cent!

If you want me to help you explore your options, contact me – Bernard Kelly – anytime. My email is admin@retirelaughing.com


SELECTED REAL ESTATE IS BEST

When our parents retired, they were advised to take their savings and lump-sum payouts and invest everything in "ultra-safe" debentures and the occasional blue-chip stock.

However our generation will enjoy longer and more active retirements, so the conventional wisdom is now to keep your retirement funds growing and defer a conservative investment strategy.

However if you rely on the advice of financial planners and television gurus, you will continue to add equities to your portfolio. The problem with that is that you will be adding to assets that tend to move up and down in the same pattern.

As recent history has shown, you can’t afford that risk.

Which is one of the reasons why I like residential investment property. Not only is it inflation protected, and can’t disappear (as is possible with major listed companies), but property adds diversification.

Real estate remains a smart choice for capital appreciation and income generation, and its inflation-fighting power is second to none.

However not all real estate can be expected to provide you with maximum benefits. Most products – such as inner city apartments, serviced offices, student accommodation, defence force housing etc – carry hidden millstones. The best product is a family home in a growth corridor.

If you want me to help you explore your options, contact me – Bernard Kelly – anytime. My email is admin@retirelaughing.com

NEW FEE-FOR-SERVICE

To enable you always to be keep abreast of new developments, we have now established a membership site.

Go to http://www.retirementstrategies.net.au/

You can either join as a Free or Full member.

Naturally Full members – who pay a modest $110 pa for membership – receive many more privileges.

HOST AN AT-WORK SEMINAR

You probably know many people who need my experience and expertise right now.

Here’s the deal – you invite a few people to a lunch or after-work seminar, and I’ll present Retirement Strategies for Employees.

I’ll pay you $150 for your expenses, and a further $1000 for every participant who has me share an investment property with them.

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

Lifestyle Newsletter 15 August 2009

“COMFORTABLE LIFESTYLE” NOW COSTS $50,770

The latest results for the Westpac-ASFA Retirement Standard are available.

In the March quarter 2009, a retired couple will now need $50,770 pa for a “comfortable” lifestyle.

A “modest” lifestyle will cost $27,547 – only slightly more than the pension.

If you would like me to help you explore your options to achieve – or exceed – this “comfortable” lifestyle, contact me anytime.

My email is admin@retirelaughing.com and my mobile is 0414 778 518.


PROFITABLE HOBBY - MAKING SWINGS


If you want some stimulation where your hobby business can take you, you’ll definitely find a searchlight in this case study.


Barbara Clack lives on a large rural block in the hills just inland from the beach resort of Noosa, in Australia.

In 1993, she started making swings and even today she has only two part-time employees. So it’s not a massive operation, by any stretch of the imagination, even after 16 years. It’s just a very sweet business.

Initially Barbara did everything herself – buying the fabrics, timber and cords then undertaking the actual manufacture as well as finding retail outlets to supply to. But gradually, once she had established sources for inputs and had found shops that would take her swings, and she became familiar with manufacturing process, a process system emerged, and she has continued to improve on that, “one percent each time”.

The name of her business is Swingz n Thingz and the website is swingz.com.au

Barbara has never had a physical shop – and today of course it’s all done online. Her site is a stunningly beautiful and fully functional e-commerce business.

The products are basically hanging chairs and hammocks - for use at home on the verandah, for camping holidays, fishing, or sailing on your boat.

Starting with one product, the range has now expanded over the years to 12 different product categories, such as kids’ swings or Mexican hammocks. Prices range up to around $300.

When Barbara started her “hobby business” the pricing model was 25% materials 25% for waste 25% admin and marketing and 25% profit. As there was little competition, and her outlets were often in holiday destinations, she was able to earn a handsome profit on each item.

The low volume of unit sales was the problem back then. But as the wastage became less, her profits increased without having to increase prices.

Now of course selling on the internet has allowed her to increase her sales volume considerably and of course selling into a leisure market means that price is not so much of an issue with customers.

Retail sales are generated off the internet (via Google Adwords), from small advertisements placed down the back in gardening magazines, and of course Barbara continues to wholesale to high street shops.



TEN RETIREMENT ISSUES TO CONSIDER

No matter how close or far away you are from retirement - you need to take action now...RIGHT AWAY...

It’s not too late to act! And I am offering Help for your retirement - and I am talking about FREE help - is just a mouse-click away

The issues that you should to be thinking about – in additional to your financial needs - are

1. Health issues

2. Legal issues

3. Relationship issues

4. How to make productive use of time

5. Apprehensions & Fear about aging

6. Life Purpose issues

7. Life Balance

8. Relocation issues & Housing issues

9. Safety issues

Let me know if I can help. I’m Bernard Kelly and my email is

admin@retirelaughing.com


EVERYONE IS WORKING LONGER

According to data from the Organisation for Economic Co-operation and Development, there is growing acceptance of longer working lives in the industrialised world, with rising workforce participation rates among older people in many countries, even without legislation.
In the US, those over 65 in the workforce in 2007 were 15.5%, up from 12.5% in 2000.

In Australia, 8.7% of those above 65 were working in 2007, up from 6.1% in 2000.

For all OECD countries, the figures were 10.5% in 2000 and 11.5% in 2007.

Source: “Financial Times” London 25 May 2009


KEEP YOUR SUPER BENEFICIARIES UPDATED

We all focus on accumulating money for our retirement as a way to help enjoy a long and financially comfortable life.

Much less thought is put into what becomes of those assets after your “estate event” occurs.This is particularly true of superannuation, as we generally don’t pay much attention to it.

When you open an individual superannuation account, you should have completed a designated beneficiary form.

The most common beneficiaries are spouses, children or other family members – however when you went into your first superannuation, it is unlikely that you had a spouse or children at that time and you probably don’t even remember the names you listed on the designated beneficiary form.

Many people assume their current will provides all of the necessary instructions about the disposition of assets at death, including those in your super fund.

But in fact, the designated beneficiary forms filed with your super accounts will take precedence over your will.

The reason is that a retirement account is not considered a part of an estate.

Given that a lot of things change in life, you’ll probably need to go back to your super fund and nominate (given your relationships today) who you want you super to pass to.