Superannuation & Retirement Advice

This document provides expert advice on superannuation and retirement planning. It discusses the importance of a superannuation fund in a financial plan and provides guidance on achieving financial goals before and after retirement. It also covers risk profile, asset allocation, and investment strategies. The document is suitable for individuals looking for retirement planning advice.

Superannuation &
Retirement Advice
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Table of Contents
Executive Summary...................................................................................................................3
Present Position/Information about the clients, Financial Positions and Important assumptions
....................................................................................................................................................5
Risk profile and Assets allocation..............................................................................................8
Quality of advice and recommendation...................................................................................10
Analysis....................................................................................................................................18
Conclusion................................................................................................................................19
References................................................................................................................................21
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Executive Summary
A superannuation fund is an essential part of a financial plan. One should formulate a
financial plan by keeping superannuation fund in mind, as it plays a very important role in
cash inflows after retirement. In the given case the client Graham and Anna who are 53 and
51 years of age having two dependent children, plans to get retire after 9 years i.e. at the age
of 62 and 60 respectively. Before the retirement, they wish to accomplish their goals which
included to purchase a house and they're after retirement expenses including holiday expenses
once in two years. They wish to invest their money in such a way so that they can achieve
these objectives.
Both Graham and Anna has shared more than 25 years of their married life. If we talk about
the main earner, then Graham has always been the main source of income earner because due
to the future of their children and to focus on children’s career Anna has left her secretarial
job a long time ago.
As Graham has been working as a senior engineer with BlueScope Steel for the last 26 years
and recently as a part of major restructure he was offered voluntary redundancy. The benefits
are $175,000 in total as a redundancy benefit.
Subsequently, Graham has offered a new role in Pilbara Port Corporation as a site engineer in
an ongoing contract in Western Australia with the total package that he is earning now
$195,000 plus the superannuation benefits 9.5%, which Graham is going to join. Graham and
Anna with their 2 children will soon shift to Perth and he will start his new role as a site
engineer in Pilbara Port Corporation. (Ainsworth, et. al., 2016)
Anna is also willing to join a new job and found a part-time role as a personal assistant to a
training and development manager at “All brains Inc.” As confirmed by her she will soon
start her new role in three months’ time and her remunerations will be $52,000 p.a. plus
superannuation at 9.5%.
The couple is planning to rent initially an estimated $650 per week as rent per week. For the
purpose of buying a property in Perth, they have also approached an agent as they want to
own property rather than rent. Graham will manage to the Pilbara region as he will fly in fly
out. His work structure is designed in such a way that he will initially work for 10 days and
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then 6 days off. The company is supposed to bear all his travelling and living expenses. The
family home that they have been rented on $600 per week (Williams, 2018).
They will be planning to buy a house by borrowing money from their superannuation fund
and have done the formalities.
Graham and Anna have also made some investments in various properties that were
purchased more than a period of 18 months in 2011-12. There are 2 residential investment
units on the gold coast which are now valued at the cost which is less than their purchase
value. Below are the original purchase price of the properties:
Gold Coast: Unit 1 $159,000
Gold Coast: Unit 2 $268,000
Brisbane industrial property: $385,000
Wollongong family home: $310,000
It is expected that the investments in Gold Coast units will get double in the time frame of 10-
15 years, but Graham is getting very concerned now about his both gold coast units which are
valued below their original purchase price. He is also concerned about the properties and
wants the overall negative gearing as a tax advantage.
One more concern of them is to admit Anna’s mother Marie in an aged care facility. Marie
Francis, Anna’s mother is 78 years of age and has been living in their granny’s flat
(non-homeowner) in Wollongong, due to illness and other health issues, she been currently
assessed by a team of aged care facility and the aged care home has allowed her to shift in
their aged care facility (Bateman and Morris, 2015).
Marie has an investment worth $380,000 in the form of cash and also in the bank’s term-
deposit. She receives a part age pension. Graham, Anna and Marie have selected a church-
operated facility in Wollongong as per Marie’s comfortability. This has a deposit price of
accommodation is $240,000. Both Graham and Anna believe she will live with comfortability
with an income of $22,000.
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Present Position/Information about the clients, Financial
Positions and Important assumptions
Currently, Graham and Anna Sutton who are 53 and 51 years of age having 2 children Sam
and Jodie, are working as a senior mining engineer at BlueScope Steel, Wollongong, NSW
and discharging home duties respectively. Graham’s total redundancy benefits are $1,75,000
and as Anna is discharging her home duties she is not earning anything in terms of money
(McGowan, 2018).
After the two-week time, Graham has an offer which he is going to accept to work as a site
engineer in an ongoing contract in Pilbara Port Corporation in Western Australia, with the
total package of $195,000 plus superannuation of 9.5%, simultaneously Anna is also looking
forward to engaging herself in the workforce and has found a suitable part-time role in Perth
as personal assistant to the training and development manager at All Brains Inc. Anna will
earn $52,000 P.A. plus superannuation at 9.5%.
Their children are still in school and the expenses are expected on them is $ 10,000 per year
on each child up to the age of 24. Graham wishes to retire after 9 years and Anna wishes to
work till Graham does.
Graham and Anna have to move for the purpose of their new job and the expenses are
expected to be $ 650 per week. They have also made some investments in their own names
and joint names. Apart from this their estimated annual growth income is $2,50,900 and
$71,650 for Graham and Anna respectively (Clark, et. al., 2018).
Basically, Graham and Anna have estimated that they will require $65,000 per year in terms
if today’s equivalent dollar, excluding their holiday cost which will occur in every second
year that was estimated to $15,000. Graham and Anna will both earn estimate $2,50,900 and
$71,650 p.a. in coming years, so and their annual expenses are $1,58,000, so they have
$1,64,550 for investments and other than house-related expenses (Willows, et. al., 2018).
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Graham and Anna can attain the objective that they have set after their retirement by
following the below points:
 They need to increase tax saving by taking the benefits of maximum deductions of the
income for the purpose of tax and ensuring handsome amount in government
securities which are also helpful in saving tax (Dwyer, et. al., 2018).
 Invest in such securities from where they can get higher dividend and interest such as
debt fund, debenture and fixed deposits.
These forms of investment can help them for better investments opportunities and maximise
returns form the investments and secure money for their children to achieve their set financial
targets. It would also be possible for them to own their own house if they manage the tax
accordingly and also help them to have sufficient funds at the time of retirement. It would
really help them to better orientation and ensure effective financial development. Every
financial plan focused on generating more revenue from the investments that have done and
make the investments in such assets where the high return is generated (Niblock, et. al.,
2017).
For attaining the financial objective, the following assumptions need to be taken by
Graham and Anna:
 The income that both Graham and Anna are earning will be increasing as their
increment comes into effect.
 There will not be any major expenses will arrive which is not anticipated.
 All the working conditions will be constant for them.
If we talk about the annual income of Graham and Anna, it can be better observed through
below table.
Details of estimated annual gross income
Graham Anna
Gross salary income $195,000 $52,000
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Gross rental income** $53,400 $15,600
Interest income^ $2,500 $2,500
Managed fund income## $1,550
Total $250,900 $71,650
** Rental income of 4 × properties including Wollongong home.
^ Interest income from the online savings account.
## 5% income excluding fully franked credits.
Graham and Anna’s total estimated income will be $250,900 and $71,650 for the
current and subsequent years. If we talk about their expenses they are estimated to
$158,000 as per the below bifurcation.
Annual rent $33,800Expected rent in Perth (annualised)
Annual living $42,000
Holidays $10,000
Deductible outgoings
(i.e. interest)
$44,0004  rental properties including family home to be
rented (interest-only repayments)
Children’s education $20,000
Life insurance (held
outside super)
$5,200
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Motor vehicle costs $3,000
Total $158,00
0
If we consider all the points, then the excess amount can be invested to secure theirs after
retirement age for smooth after retirement life. Graham and Anna also anticipated the funds
they will require after retirement for their expenses. The expenses anticipated are $65,000 per
year plus $15,000 for the holidays once in two years. So it can be achieved through the
investments and the houses that are given on rent by Graham and Anna.
Risk profile and Assets allocation
Generally, risk profile indicates the available risk and what measures have taken to minimize
the same and should a low to average risk taking capacity with two dependents children on
them. So for this, it becomes very important for Graham and Anna to make systematic
investments in low-risk securities or the investment opportunities with the lowest risk. More
return can always help in sound financial stability (Raju and BR, 2019).
The first process of financial planning is the setting of goals and it is the first and most
important process of financial planning. In this part, you can assess the financial situation of
the person with the help of different resources that are available and the available assets and
liabilities. The main focus of this analysis should be on the earnings and outgoing of the
individual, asset and liabilities of the individual and the risk tolerance capacity of that person
whose risk profile is being evaluated. This will only become successful if all the facts and
information provided are complete and accurate.
After the identification of the financial position of the company, another way in this process
is to build a strong financial goal. A specific goal must be set in such a way that it is achieved
in the available time frame. Graham and Anna must set the priority of their goals, achieving
the important one at first and it is also must to analyse the limitations, as limitations are also
the factor which can affect the outcome of their financial goal. Once the goal is fully done
and the respective plan comes in action, it is identified that the plan is matched with the goal,
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need, and priority, then only the plan moves further to the next step. There are so many
factors that will involve in the development of a financial goal.
The process of choosing investment options from the available options is known as asset
allocation. Asset allocation is there to match the personal risk profile of the individual and the
set investment goals in terms of return from assets. In general, terms, if you are less in age
and have a lot of assets and you do not expect any big expense in near future then you can
take more risk with your investments (Hanrahan, 2018).
After the financial goal is determined and actions which need to be taken are set even this
there must be a ready backup plan is prepared to make any decision a good decision. So,
there must be an alternative course of action as a backup, if the main plan doesn’t work then
they must get prepare themselves for the second plan. Alternatively, it can also be possible to
expand the existing plan or to make some modification in the plan. After this, we need to
move forward to the next step that is to examine the alternative.
Once the alternatives are set, we need to move to the next step which is to evaluate to what
extent the available alternatives are viable. Now there are few plans are in a single place and
in the next step we need to select plan among the plans that are available. The identification
of the risk and taking the corrective measure could help them to move forward in achieving
the set financial targets.
In this step, the actual implementation of the plan is done. The plan which we were preparing
to achieve the set financial targets is implemented in this step. There must be a short term
measure that should be first focused and then only the plan should proceed to the next stage.
It might require the help of other partiers to implement the plan.
Now after the plan is fully implemented the subsequent step in the process is to review the
plan timely. The plan must be regularly monitored to evaluate any changes and modifications
in the outside financial environment like the change in government requirements or the
market condition and other uncontrollable conditions. Changing the trend of the market and
the personal financial situation is also affect the financial plan.
Asset allocation strategy can only be developed by Graham and Anna by using their risk-
return profile. As discussed in the above paragraph for better allocation of assets and they
need to identify their risk-taking capacity and low-risk investments. There is an assumption
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regarding the asset allocation which is actually true that the closure a person to his or her
retirement target date, the major investment should change to reflect less tolerance and
volatility of risk. Hence, for better allocation of assets, Graham and Anna need to identify
their risk-taking capacity and to assess their retirement and superannuation plan that actually
how they will be going to earn after their retirement. After the proper investment as per their
capacity has been done they need to monitor and manage their portfolio.
Quality of advice and recommendation
The first and most important thing for this is to set the goals which they actually want to
achieve. Graham and Anna have set their goals for both long and short term perspective,
considering all the relevant points including the expected expenses on their children.
For attaining the goals that are set by Graham and Anna it is advisable for them to manage
their expenses accordingly and focus on the investments. It is highly recommended to them to
invest their excess money in such securities from where they can earn more dividend and
interest and low risk-bearing investments. It is also recommended to them to invest in such a
manner from where they can save the tax also so that they have the option to invest more.
It is strictly recommended to manage their superannuation fund because it ensures money to
invest where the person wants to invest, so it should be invested in those securities where the
return is high and having low risk. To manage superannuation in such a way that one can also
plan to earn bonus as per the superannuation scheme. Superannuation is always tax-free on
retirement so it should be only withdrawn on retirement. By pooling the retirement savings
with other fund members with a large super fund, one can also take advantage of the
investments otherwise would not be able to access as an individual.
The current gap between income and expenses also needs to be filled by investing the excess
funds in the proper portfolio, from where high risk can be earned taking the lowest possible
risk. This technique will help them to reach their set financial targets with an easy manner
and also has additional liquidity when retiring from their services. This will take care of the
inflation also with their other important expenses such as children expenses, travelling
expenses that will come in future.
The strategies that are to be used mainly include to ensure higher dividend income and
interest income, all of this will help Graham and Anna to ensure that they will save money in
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a better manner. It would not be correct to suggest Graham and Anna that they should reduce
their expenses as this will decrease their standard of living and which is not the objective.
Instead, they should be improving it is as the set objective. So based on prioritization of
expenses, schooling of their children and purchase house are the first two elements that need
to be provided for first and rest all expenses will be secondary. Apart from these savings for
their retirement and a holiday, is to be managed in a different manner. Investments should be
made for this purpose and try to generate additional returns from the investments that can to
be used for the purpose of housing and schooling. It is possible for Graham and Anna to
create good growth if the market conditions are a favourable i.e. good return on the area
where they have invested the funds and wise investment decisions are taken.
The methods to be used to reach the goals that are set by Graham and Anna include the below
points:
a. Increase tax savings through by taking the benefits of deductions and to ensure that the
investments that are made in government securities help them in tax saving.
b. to invest in such a way from where you get higher dividends income and interest.
c. Invest in bonds and shares of those companies which have a track record of paying a high
dividend.
These tactics are helpful to manage a smart investment portfolio and returns for Graham and
Anna and help them to attain their financial goals. It would be possible for Graham and Anna
to purchase a house and it would also be helpful for them to have sufficient funds at the time
when they retire from their service. It would help them for growth’s perspective and overall
development of full family (Taylor, et. al., 2017).
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The investment in the properties which were purchased over a period of 18 months by
Graham and Anna in the year 2011-12. Both the below residential investment units on the
Gold Coast valued at the price below their purchase price. The actual price of the properties
plus cost of properties are depicted below:
• Gold Coast: Unit 1 $159,000
• Gold Coast: Unit 2 $268,000
• Brisbane industrial property: $385,000
• Wollongong family home: $310,000
As per the books read by Graham on building wealth through property investments and has
become part of some investment related seminars which recommended the negative gearing
onto the property. It was expected from this that the investment in property could double in
coming 10-15 years but Graham is very concerned about the same and he valued both his
Gold coast units less than their actual purchase price. He is not fully sure that what he needs
to do with these properties. Graham has also said that he wants to explore the establishment
of a self-managed superannuation fund (SMSF) as he has gathered information from some
source that he can borrow funds through an SMSF to buy a property. So instead of generating
cash liquidity from the Gold Coast Properties, Graham has opted the option to borrow money
from his superannuation fund. If this happens i.e. he borrow money from his superannuation
fund, then he has to be ready that he will be having very less amount at the time of retirement
and he has also kept in mind that at the time of his retirement his younger child Jodie will
become 22 years old and he will also have Jodie’s expenses $10,000 per year for next 2
years. Contrary to this he would not be having any liability from Sam’s side.
Now Graham and Anna will able to take the benefit of the instalments for the tax saving
purpose and they are able to save their taxes in future years. As per them, it is estimated that
they have settled all their debt till their retirement and they will require $65,000 per year in
terms of today’s equivalent dollar excluding their major holidays, which they are planning to
take once in every second year at a cost of $15,000. At this point in time, they want to retire
in Wollongong or near the south coast of New South Wales (Hunt and Terry, 2018).
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Graham and Anna also responsible for Anna’s mother, Marie Francis, having 78 years of age
and she is living her granny’s flat (non-homeowner) in Wollongong has, as a result of some
health issues and illness, been currently assessed by a team of age care facility and granted
her approval to admit her in their aged care facility. As she moved to the aged care facility
her property will be with Graham and Anna only (Cummings, 2016).
The Marie’s only investment is $380,000 which is in the form of cash and in the form of term
deposits with her bank. She is also a receiver of a part age pension. Graham, Anna and Marie
have selected a church-operated facility in Wollongong in which Marie feels comfortable.
The deposit price of this is $240,000, which should be deposited in terms of cash.
They expected that she will live comfortably on an income of $22,000 per year. So this will
become Graham and Anna’s responsibility to deposit and pay to the aged care facility.
Anna’s sister, who lives near Wollongong, is going to help them and provide them with
support when they move to Perth. It means they need not worry about their stay and other
things initially in Perth.
Portfolio and other personal assets of Graham and Anna are below:
Graham Anna Joint Loan
St. George Bank online a/c $150,000
St. George savings a/c $8,000
Colonial First State Index Australian
Share fund
$31,000
BlueScope Steel superannuation fund
(balanced profile)
$370,000
CareSuper Industry Fund – conservative
balanced option
$43,000
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Industrial property — Brisbane $445,000 $340,000
Investment property — Gold coast: Unit 1 $155,000 $135,000
Investment property — Gold coast: Unit 2 $245,000 $205,000
Wollongong — family home $685,000 $217,000
Car $25,000
Home contents (insured value) $65,000
If we look for the assets of the Graham and Anna and their joint assets and loan their
portfolio mainly contains their superannuation fund and investments in property Gold Coast
Unit 1 and Unit 2 and they also have an industrial property at Brisbane. They also have the
existing loan on Industrial Property at Brisbane, loan on Gold Coast Unit 1 and Gold Coast
Unit 2 and on the Wollongong family house. Also, Graham and Anna wish to purchase their
new owned house for which they need to borrow money from their superannuation funds.
As they borrow money from their superannuation we need to discuss a few advantages and
disadvantages of superannuation.
Some advantages of superannuation
 There are experts in a particular field who does hard work for the employees that is where
the money will provide the maximum benefit, where to invest.
 Choose the best superannuation fund because there are a lot of superannuation funds
available for the employees.
 A facility is also available in many superannuation funds that they can set up to a regular
saving plan and does the lump sum payment to employees as per requirement.
 All the resources are pooled with other investor’s resources, allowing them to make the
money invested in those areas where it is almost impossible to invest individually.
 It is also very helpful to diversify the investments very easily.
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 The benefit of greater economies of scale can also be taken from this, such as to reduce
the transaction costs.
 The savings are locked for a predetermined period of time.
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Disadvantages of superannuation funds
 The lifestyle of the family will surely get a change in the future coming years as there is
flexibility in superannuation in this kind of changes.
 You will get the diversified investments if this is the single investment you have.
 There is a tax-efficient element available in this hence the funds will become tax
inefficient for those who are paying tax on a marginal tax rate.
 There are some costs over and above those you should pay if you were investing directly
in those funds in which you were investing under the superannuation scheme.
Some clients may not have been managing their superannuation savings effectively and may
need to make some simple changes to maximise their savings capabilities. Some
recommendation for superannuation is as follows:
 Switching funds, but only where necessary. Exit fees, entry fees, increased fees and
lost benefits must be clearly explained and justified to the client. A product
replacement table or comparison is essential with any change recommended in the
SOA (Cheung, et. al., 2018).
 Switching investment options within the existing superannuation fund where
necessary
 Contributing more to superannuation, perhaps for one spouse
 Reducing superannuation contributions.
Employer contributes to superannuation for the benefit of or on behalf of employees towards
group superannuation policy held and maintained by him. Organisations have the option to
manage a self-superannuation fund by their own held trusts or to manage a superannuation
benefit fund with the available approved insurance companies or buy the product from
insurance companies. Normally the employer divides its employees into categories and
contributes a fixed percentage of that contribution and the same amount needs to be invested
by the employee.
Here, in this case, Graham and Anna will borrow money from their superannuation to invest
in the new house that they want to own to live. The balance of superannuation in Graham’s
account is $370,000 which contains a tax-free component of $22,000 and taxed component is
$348,000 while the balance in Anna’s superannuation is $43,000.
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They want to borrow money from the superannuation fund to buy a new house. For the
fulfilment of their after retirement financial goal they need to access the possible expenses
and incomes. The possible income source after retirement is the amount of rent that will
receive from the house that is given on rent, interest income and dividend income etc. (Sy,
2018).
For this, it is strictly recommended to Graham and Anna to manage their superannuation fund
wisely for the amount they borrow because superannuation fund ensures money to invest
where the person wants to invest, so it should be invested in those securities where the return
is high and having low risk. To manage superannuation fund there are many ways using them
one can also plan to earn bonus as per the superannuation scheme. Superannuation is always
tax-free on retirement so it should be only withdrawn on retirement. So there may be one
more planning is possible to borrow money from outside banks or financial institutions and
repay them on EMI basis or repay at the time of retirement when the superannuation funds
will get received by Graham and Anna. By pooling the retirement savings with other fund
members with a large super fund, one can also take advantage of the investments otherwise
would not be able to access as an individual (Carruthers, 2015).
For this gap analysis should be done. The current gap between the expenses and the income is
also needed to be reduced by investing the excess funds in a portfolio that will be proper in
terms of risk and return that is from where high risk can be earned by taking the lowest
possible risk. This technique will help Graham and Anna to reach their goals timely with ease
and also has additional money when they take retirement from their service 9 years down the
lane. This will take care the cost inflation fluctuations and also with their other important
expenses such as children expenses, travelling expenses once in two years that will come in
future (Bissoondoyal-Bheenick, et. al., 2018).
The strategies should be made and used which includes ensuring to earn the higher dividend
income and interest income and all of this will help Graham and Anna to ensure that they
could save more and in a better manner. As a long term perspective, saving more money
would be slightly difficult for Graham and Anna as their family consist of 2 children and both
will do schooling and dependent on Graham and Anna and the schooling of children as well
as buying house will come as an expenses and its instalments will be paid by Graham and
Anna. It would be incorrect to suggest Graham and Anna that they should cut down on their
normal expenses as it will reduce their standard of living as this will not be the objective to
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reduce the standard of living (Butler, 2016). Instead, they should be improving it is as the
target. So based on the importance of expenses, schooling of children and housing expenses
are the first two first that are need to be provided and the other expenses should have met out.
Apart from these savings for their retirement and a holiday for travelling which are planned
once in 2 years should be managed differently. Investments are to be made wisely for this
purpose and they try to generate the additional returns that can to be used for this purpose. It
is possible for Graham and Anna to create better growth if the markets are a favourable i.e.
good return on the area where they have invested the funds and suitable investment or fund
management decisions are taken (Bird, et. al., 2018).
As per the books read by Graham on building wealth through property investments and has
attended few seminars related to investment which recommended negative things in respect
to the property. It was expected from this that the investment in property could double in
coming 10-15 years but Graham is very concerned about the same and both his Gold coast
units are valued at below their actual purchase price by him. So instead of generating cash
liquidity from the Gold Coast Properties, Graham has opted the option to borrow money from
his superannuation fund. If this happens i.e. he borrow money from his superannuation fund,
then he has to be ready that he will be having very less amount at the time of retirement and
he has also kept in mind that at the time of his retirement his younger child Jodie will become
22 years old and he will also have Jodie’s expenses $10,000 per year for next 2 years.
Contrary to this he would not be having any liability from Sam’s side (Bateman and Thorp,
2018).
Now Graham and Anna will able to take the benefit of the instalments for the tax saving
purpose and they are able to save their taxes in future years. As per them, it is estimated that
they have settled all their debt till their retirement and they will require $65,000 per year in
today’s dollar excluding their major holidays, which are planned once in every second year at
a cost of $15,000. Their wish at this stage is to retire in Wollongong or near the south coast of
New South Wales.
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Analysis
The above case study belongs to Graham and Anna, a married couple. Graham is the main
earner of the family and he is going to change his job to another company. Anna was also a
professional but he left her job to give time to their children. Couple wants to move in Perth,
where Graham will join his job. They wish to buy a property in Perth. For the purpose of
purchasing the property Graham is going to borrow money from superannuation fund.
There is balance available in Graham’s superannuation account is $370,000 and balance in
Anna’s superannuation account is $43,000. The amount for the new property will be
borrowed from superannuation fund of Graham. As it is implied that the superannuation
amount can be withdrawn at the time of retirement in normal course. So they will not be
going to receive very big amount at the time of their retirement. Hence they need to manage
the available sources of income during and after retirement.
After retirement they have estimated that they would require $65,000 per year and $15,000
for holidays once in two years. For this they will have the income source from the rent of
their home property, dividend and interest income form the investments they have made. It is
also supposed that they will settle all their debts till their retirement. They will approximately
receive $53,400 in Graham’s account and $15,600 in Anna’s account as rent and both will
also receive $2,500 as the interest income. The investments should also be done by keeping
the tax factor in mind. They needed to have tax saver investments after their retirement to
achieve their target financial goals.
So their retirement plan should consist of their expected expenses after retirement and the
expected incomes which they will receive from the rent and investments.
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Conclusion
To conclude this assignment, it is very important that there must be an effective balance
maintained by Graham and Anna in order to create a good level of financial stability. Buying
or building a house is very important if we talk about a financial decision that has taken and
there are so many things that need to be considered before finalising the decision. Research is
very important for Graham and Anna on the available sources of funds to buy the house as
they have chosen to borrow funds from their superannuation balance they need to consider
other factors also. As they are a family which contains 2 adults and 2 children i.e. family of 4
members they do not require a very big house so, the requirements of funds will also not very
much and it becomes easier for them to ensure their financial positions related to risk and
return.
Risk and Asset allocation will also become a very important factor while concluding this
case. There are various ways and methods for risk allocation which includes the following
steps:
 Setting the goals
 Identification of risks
 Prepare a plan
 Implement the plan in concerned areas
 Manage the plan
 Review the plan
Asset allocation strategy can be developed by Graham and Anna by using their risk and
return profile. For better allocation of assets and the couple need to identify their risk-taking
capacity and low-risk investments having a high return. There are many assumptions
regarding the asset allocation which is actually true but the most important assumption is that
the closure a person reaches to his or her retirement’s target date, the major investment
should change to reflect less tolerance and volatility of risk. Hence, for the better allocation
of available assets, Graham and Anna need to assess their risk-taking capacity and to identify
their retirement and superannuation plan that actually how they will be going to earn after
their retirement. After the proper investment as per their capacity has been done they need to
monitor and manage their portfolio. In other words, we can easily conclude it as they should
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assess the assets available and invest in such a portfolio where they can earn a good return by
taking the lowest possible risks.
We can conclude the quality of advice both Graham and Anna have simple wills to buy a
house and they have also bought a house 15 years back when they purchased their family
home Wollongong. Earlier they left everything in each other’s name. they have not
completed the nominations nor they have the power of attorneys with their approved
superannuation plan. They are borrowing money from their superannuation funds. Now
Graham and Anna will able to take the benefit of the instalments for the tax saving purpose
and they are able to save their taxes in future years. This will reduce its cash outflow in terms
of taxes. As per them it is estimated that they have settled all their debts till the date of their
retirement and they will require $65,000 per year in terms of today’s dollar excluding their
major holidays which will occur once in two years, which they are planning to take in two
years’ time means they will take them on every second year. Their wish at this stage is to
retire in Wollongong or near the south coast of New South Wales.
Graham and Anna also mentioned that Anna’s mother, Marie Francis who has the age of 78,
is living in their granny’s flat (non-homeowner) in Wollongong, as a result of her health
issues and illness, she has been recently assessed by an aged care team who get ready to take
her in their aged care facility. As she moved to the aged care facility her property will be with
Graham and Anna only. If we look for the assets of the Graham and Anna and their joint
assets and loan their portfolio mainly contains their superannuation fund and investments in
property Gold Coast Unit 1 and Unit 2 and they also have an industrial property at Brisbane.
They also have the existing loan on Industrial Property at Brisbane, loan on Gold Coast Unit
1 and Gold Coast Unit 2 and on the Wollongong family house. Also, Graham and Anna wish
to purchase their new owned house for which they need to borrow money from their
superannuation funds.
For a better planning, Graham and Anna should take a loan from their own superannuation
fund. They can also borrow fund from outside financial institutions and repay that at the time
of their retirement when superannuation maturity amount will receive.
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