(Red Line = Proposed Scenario, Blue Line = Current Scenario, Green Line = Proposed Scenario with the client retiring earlier than planned)
Seemingly small financial mistakes can make a huge impact over the long term.
In this example, the clients make a great household income of $400,000 p.a. combined so they should be ok. However, they:
Are spending all of their income. By not saving they are missing out, not only on each dollar they save, but also the opportunity cost of what that dollar could do when invested.
Have too much of their wealth in their home and not enough in income producing assets.
This property is only growing at 3% p.a. whilst it is incurring interest on it’s associated debt at 6% p.a.
By making a few changes to their finances, they can be $1m better off at age 82 (shown as the blue asset line versus red line) and never run out of money in retirement.
Professional financial advice and sophisticated modelling stops people flying blind and down a path they shouldn't.
Opmerkingen