Simon & Jacquie's Story

Planning early yields dividends.

Meet Simon and Jacquie. They’re a young couple who have both just turned 30 and have a son, 4, and a daughter, 3.

Five years ago, they left Perth to work for a global oil and gas company in Karratha. This decision paid dividends as they are both now on excellent remuneration packages with employee entitlements.

When we first met, they explained their goals.

“We’d like to have enough money so we can be financially independent by the time we turn 50,” Simon said. “We’ve got this dream of travelling the world with our kids and spending some time living in France with Jacquie’s family.”

We looked closely at Simon and Jacquie’s finances. They had a 30 year mortgage of $360,000 and repaid $2,396 a month. We knew they would have to accumulate wealth outside their superannuation fund so that they would have a passive income stream when they turned 50 – ten years before they could access their superannuation savings.

Our Design

Our calculations revealed they would be paying around $500,000 in interest over the mortgage’s 30 year term if they continued with their current principal and interest payments.

The loan would be paid off in 19, not 30 years.

Our advice was to increase their repayments to $2,880 a month.  They could afford the extra $484 – and the savings would be substantial. The loan would be paid off in 19, not 30, years and they’d save a staggering $215,000 in interest. Their home would be paid off in time for them to move to France at age 50.

We then suggested they used the equity in their home to directly invest $250,000 with TWD in one of our proactively-managed Australian share portfolios. The monthly interest cost of the investment loan was $1,650 and fully tax deductible.

If the share portfolio averaged an annual ten percent growth, in 20 years it could be worth $1.8 million dollars. This would provide the passive income required for their financial independence. If the portfolio was left for a further 10 years, we estimated it would be worth around $5 million dollars.

Simon and Claire were delighted to learn that their dream could become reality through careful planning. The loan they used for the shares was secured against their house  - so they were comfortable that there was little possibility of a margin call.

So, we saved them a fortune in interest and set up a tax-effective investment to achieve what was most important to them.

It’s a great example of how planning your finances early in your life can help you achieve long-term results and goals.