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Statement of Advice
Prepared for
Key information
Thomas Pike
37 years of Age Employed as a Lecturer Excellent health No private hospital cover Current Will in place
Jenny Pike
36 Years of Age Employed as a Project Manager Excellent health No private hospital cover Current Will in place
Risk profile
Risk Profile Assessment Conservative to Moderate Thomas and Jenny seek a balance of income and capital growth over the medium-tolong term. You are prepared to take short-term risk for potential long-term capital growth. The recommended minimum investment timeframe is 4-5 years. Our advice to you will be influenced by your risk profile, so if our assessment is not correct please let us know immediately as this could affect the recommendations we provide. The characteristics of each of the risk profiles are set out in the table below.
Aggressive Growth
Comfortable with short-term volatility High levels of capital growth with a moderate level of income 20% exposure to income and 80% to growth assets Likelihood of a negative return 1 in every 5 years 45 year time frame Medium to high levels of shortterm volatility Increased risk of capital loss Very high levels of capital growth with a moderate level of income 100% exposure to growth assets Likelihood of a negative return 1 in every 4 years 57 year time frame High to very high levels of shortterm volatility
Moderate
Aims to achieve long-term capital growth Moderate to high levels of income and growth 40% exposure to income and 60% to growth assets Likelihood of a negative return 1 in every 6 years 34 year time frame Medium levels of short-term volatility
Defensive
Focus is preservation and stability of capital 90% exposure to income and 10% to growth assets Likelihood of a negative return 1 in every 20 years 12 year time frame Low levels of short-term volatility
Returns
Recommendation
Your South Brisbane house has steadily increased to approx $700,000 in value, which provides you with a substantial source of untapped equity. Apart from your superannuation, this is your primary asset. It is anticipated that your house value will increase at an average rate of 7% pa over the long-term (based upon 10 year historical trends). In Brisbane, the property market has shown little growth in the past two years, with some properties evidencing a retraction in values. This trend has also been experienced in the Perth property market. Subsequently, we are currently witnessing a "buyers market" rather than a "sellers market". This means that selling your property in this market could see you make a reduced capital gain. Consequently, we believe the most suitable option for you, given your current financial position, is to rent your Brisbane property and initially rent a property in Perth. Should your term of stay in Perth extend beyond 12 months, you could then investigate purchasing a residence in Perth.
Assumptions
Sufficient life and income protection insurance is in place for both Thomas and Jenny via their superannuation funds. Both Thomas and Jenny are able to secure and maintain employment in Perth on similar remuneration (with increases aligned to CPI). Superannuation Investment Returns of 6% p.a. Inflation 3% p.a. Wills detailing guardianship and Enduring Powers of Attorney are in place for both Jenny and Thomas. Thomas and Jenny to consider Private Health Cover.
Fees
The fee for our service is $1,000. This being payment for the analysis, calculations, advice and preparation of the Statement of Advice.
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