Financial Plan - Creating my own

[brettc4]

Gunlom, I am interested in the types of things you covered in your own plan. Are you willing to share any of these either publicly here, or as a private message? I am not interested if your specific plan, just the types of things covered.

Cheers, Brett

 

[Young Gun]

I work for a financial services company and i have done the dfp (diploma financial planning) and I can tell you one thing. If you are interested in going to a financial planner dont go to a brand named one. Ie - Any of the major "franchise planners", bank planners ect.

The only advice you will get from these planners are to invest in financial produts such as managed funds and superannuation. Why ?

As a planner they get kickbacks for recomending these products and it is a steady flow of remuneration for the planner. Virtually none of these franchise financial planners will tell you to invest in shares independtly or through direct property. Why ?

It is difficult for the planner to tap into remuneration for his advice. Ie - You go to a planner he tells you to invest in a residential property, how is he going to get any remuneration from this ? There are ways but franchise planners are not structured like this.

Having said that there are good planners out there who will give you unbiased advice that stems further than just managed funds and salary sacraficing.

Your best bet is to do some reasearch or get recomendations for people, word of mouth is probably the only way your going to find a good planner. Most good planners have a background in accounting or are small firms with a couple of people. Only take investment advice from a planner with a proven track record, someone who has been there and done that.

 

[Gunlom]

Sure here is a copy of my plan, but be aware that it is purely written for me by me, so some things may not make 100% sense, but I understand them.

I have this on my notice board in my office so I see it most days and look at it constantly. I also do small plan's with every individual investment (shares or property) so a long term investments doesn't become a short term one or visa-versa. I have also started to blog about my ideas, which further expands on what i'm doing. Feel free to look at it http://maazels.blogspot.com/


I have no training or qualifications to give anyone advice.


10 Year Financial Plan
(July 2007)


- By age 40 (2017) I will have a passive income of 100k
- By early to mid 2010 I shall have paid of our family home.
- To achieve this I will have;
* $2mil Property portfolio (50k refinance a year)
* $1mil Share Portfolio (50k div yield)
- Take $50k from each to fund the Passive Income


Hi-growth Portfolio

- 10% savings each week, when it reaches 1k, transfer it into share trading account, and wait for opportunity’s
- Leverage and High growth is primary focus ( about 70% of my funds )
- Secure Blue Caps with good yield ( about 20% )
- Speculative ( max 10% )
- Average 1-3 years timeframe

Income Portfolio

- My wife will look to buy high yielding good cash flow equities
- Businesses with secure long term earnings
- Pay out a large portion of EPS into DPS
- Buy in the dips, long term view
- Min 10 year timeframe

Property

- Look to buy a property when I can put about 25% deposit in,
- Use current Properties to fund, new purchases
- Multiple Income properties and development potential ones
- Once our house is paid out, borrow 80% to buy Positive cash flow Investments
- Be selective.

Business

- Around 35-36 (2012-2013) look to purchase / start a business
- Increase Income streams
- Look at online business or limited options trading strategy
- Do ample research and gain sufficient knowledge to run business


Investing Strategy

1) income
2) leverage
3) capital growth
- Fast money, withdraw original capital when available then, reinvest
- Never invest in something I don’t fully understand
- Every Investment MUST have a individual risk assessment and plan written down
- Continue to Invest my education

 

[tech/a]

What exactly does this mean?

Only take investment advice from a planner with a proven track record, someone who has been there and done that.

Define THERE
and
Define THAT

 

[brettc4]

Thanks Gunlom. An agreesive plan, but then again it is not use making a plan and tracking it if you know it is going to be easy to achieve.

Do you have any investment structures in place such as a discrentionary Trust, or is everything in either your or your wifes name.

Second question, your plan didn't include anything related to insurance, have you taken care of that elsewhere, or not at all?

Thanks for contributing and best wishes for your achieve your goals.

Cheers,
Brett

 

[professor_frink]

Anyone had a good experience anyone given even one snippet which significantly altered their direction and financial standing?
Care to tell us what that was?
ANYONE?

A close friend of mine and his missus have been to see a planner, and as far as I'm concerned are much better off for it. It wasn't so much that the planner was doing anything special- they could have done it all by themselves if they really wanted to. But they really didn't want to do it themselves- neither have much in the way of knowledge in this area, and they had no clue where to start. After lengthy discussions with them about where they were headed in life, he came up with a plan to get them there- they borrowed against the house to start them off in the sharemarket, organised a budget with them and consolidated their super.

Nothing fancy, but they are immeasurably better off than if they had of sat back and done nothing, which is what they most likely would have done if I had of tried talking them into doing something themselves. Whilst I agree with the general idea of your post tech, there are quite a few people out there that just need someone to help them get going. Even if a person only ever generates an average return out of something that comes from a financial planner, it's a whole lot better than 0.

 

[tech/a]

PF
I agree.
there are many who cant even budget to exist--let alone save.
Never heard of (until now) an advisor who would even suggest borrowing against the family home to trade in the market.
Most (F/Ps) would see this as irresponsible advice, infact so would I if they had the level of in competence you mentioned

Not saying F/Ps don't have a place.
Just that I don't know of any which can plot you a path.
Only you can do that.

 

[professor_frink]

PF
I agree.
there are many who cant even budget to exist--let alone save.
Never heard of (until now) an advisor who would even suggest borrowing against the family home to trade in the market.
Most (F/Ps) would see this as irresponsible advice, infact so would I if they had the level of in competence you mentioned

Not saying F/Ps don't have a place.
Just that I don't know of any which can plot you a path.
Only you can do that.

Sorry should have phrased that a little better- they could do the budget themselves and could save money- it was more so the branching off into investing that they weren't confident doing themselves. What I was getting at with the budget comment was that after he had sat down and talked to them, he came up with an overall budget for them to stick to that incorporated the new investment loan.

 

[Julia]

there are many who cant even budget to exist--let alone save.

This is why in an earlier post I suggested that your own experience of not being helped by a FP was atypical, given your own situation.

As Frinky has just described, there are lots of 'ordinary people' out there who can be genuinely helped by a visit to a FP.

Something not a lot of people are aware of is that Centrelink employs financial planners. Their advice is free.

 

[tech/a]

Centrelink employs financial planners.

Well at least they have a job!

(only kidding couldnt resist).

 

[awg]

Risk, Tax, Super, asset management.

If you look at the PDS of most financial plans, there are multiple pages
on RISK.

I'm not sure that people study this carefully enough. The planner usually does not emphasise it much, too scary for the punters. Its in there to cover their backside.

I went through each type of risk, to see if my portfolio was vulnerable to severe blows.

Use of leverage and interest rates need to take into account risk/return.
YOU need to make hard decisions, and get them mainly right.

Reputable FP will test your risk aversion.
It is a pretty lame assessment though.

If u design your own plan, does your plan accomodate changing circs..ie 20% SP fall & 2% rate rise? All your situation?.. takes a lot of thought.

One recent plan I have on file, recommends 10% of portfolio each in Centro and Allco!

traps for the unwary... liquidity, catastrophic risk, black swans etc etc


Can you simulate the outcomes for various tax advantages?
Calculations need to be done.

I believe I have seen books that are written to assist those who wish to develop there own financial plan. ( there may even be an Idiots Guide)

Even though I have developed my own little scheme, I still need to consult sometimes with my accountant, FP, broker, ATO, like minded-friends and knowledgeable people on this site, and elsewhere, to keep fully up to speed.

If u r a one man band, it is very easy to make "mistakes"

When I was younger, I made some less than optimal investment decisions, through lack of knowledge and experience, that mean my nett worth is maybe 50% of what it could be if I had followed optimal strategies.

IMO depends a lot on inclination, time, asset base.

Havent touched on asset management skills!

regards tony

 

[Young Gun]

What exactly does this mean?


Quote:
Only take investment advice from a planner with a proven track record, someone who has been there and done that.

Define THERE
and
Define THAT

Don't take advice regarding investing in any asset class unless your financial planner has invested in it himself because the chances are if he hasnt he wont be able to help you.

 

[Viginti]

A close friend of mine and his missus have been to see a planner, and as far as I'm concerned are much better off for it. It wasn't so much that the planner was doing anything special- they could have done it all by themselves if they really wanted to. But they really didn't want to do it themselves.

Working in the FP industry I have often seen the analogy between planners and personal trainers - you don't need a personal trainer to exercise and get fit, but how many people have a PT? People often need some assistance to break the "do nothing" inertia.

 

[tech/a]

Don't take advice regarding investing in any asset class unless your financial planner has invested in it himself because the chances are if he hasnt he wont be able to help you.

Totally agree.

You'd have more chance finding a DODO bird.

 

[brettc4]

Well I have started work on my plan, I am sure it will be an interesting excerise over a number of weeks/months and undoubtably, I will be review previous posts here and possibly making a few more with relation to specific elements.

Bring on Excel, there's a lot of calculations to be done.

Thanks all.
Brett