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Frequently Asked Questions

1. If I want to retire on at least half my current salary, what percentage of my income do I need to set aside?

If you want to retire on the equivalent of only half your current salary, 12 per cent of your wages every year of your working life (40 years) must be set aside.That’s a long way short of the 9% contributed under the current superannuation guarantee charge. Remember, half your current salary would result in a considerable change to your lifestyle.

2. Superannuation, the Pension, What are my options looking like at Retirement?

Over the past 10 years the Federal Government has made it harder to qualify for the aged pension and has indicated it will make it even tougher in the future.

The introduction of the assets test, deeming on savings accounts and changes to the treatment of shares and unit trusts have all ensured that fewer retirees will get the pension.

Retirement used to be a time to enjoy. Today it is a time to fear. Australia’s retirees are fast becoming the nation’s poor, squeezed by lower interest rates which is slashing the income of their investments and starving them of funds to pay bills.

Today’s retirees are providing a sobering lesson for future generations. Poor retirement planning has cost them their lifestyle. Retiring rich means starting to plan early and building a separate retirement nest egg on top of superannuation.The Government’s new superannuation rules will limit most superannuation payouts to $400,000. For many this will simply not be enough to maintain their present lifestyle in retirement.

3. I thought property investment was for high income earners or the wealthy?

Statistically in Australia, over 70% of property investor households are on combined incomes between $50,000 and $80,000 per annum. Many millionaires become so through investment in real estate.

“It’s not how much you earn that counts, it’s what you do with what you earn”

4. Why invest in property, as opposed to shares or term deposits?

In plain terms, negative gearing allows people to borrow money to purchase an income producing property, to claim a tax deduction for many expenses they incur running that income producing property … including loan interest.You tax rebates, along with your rental income are used to pay off your loan, with the tiniest in amounts coming out of your own pocket.

The end result … down the track, the tax man and your tenants will have paid most of your running costs for you and your property will have more than doubled in value, so you can now sell it and earn a tidy profit, or use this system to accumulate multiple properties to use the rental income as part of your retirement portfolio.In the early stages of investing in a negatively geared property, your costs like interest and so forth, are higher than the rental income you receive, so your property is negatively geared.Apart from negative gearing, there are two other types of gearing situations which offer you even more benefits.

Firstly, there’s neutral gearing which happens with the costs incurred “running” your income producing property match the income that the property generates. And then there’s positive gearing, where the income from your property actually exceeds the costs of running the property.

Negative gearing is the first step for most investors because, through the HUGE tax deductions offered, it is by far the most affordable, so it enables you to purchase multiple properties for a low up-front and ongoing cost.

Once your loan has reduced, and your property has increased in value, you’ll start to experience neutral gearing. This process is greatly accelerated with Mortgage Reduction.

Then down the track your portfolio will be positively geared which is the ultimate goal for many investors, enabling you to retire on a very comfortable income … much higher than you’d expect through superannuation.

5. What if I become unemployed or too sick to work?

Your loan should be set up with a 3-month buffer to give you breathing space in case of unemployment. Should your job prospects not improve you would simply sell the property. Personal trauma insurance will protect your income if you have an accident or are too ill to work.

6. What if the property is damaged?

All the major insurance companies offer comprehensive policies which cover most forms of damage [e.g. damage from a war is not covered.] The cost of such a policy is minimal and tax deductible. For a small cost you can even extend the policy to cover loss of rent.

7. Who manages my rental property?

Property managers today are generally highly trained and qualified individuals who form the backbone of the real estate industry. In the case of PISG clients, we will recommend a property manager who is an expert in your chosen suburb and has an excellent track record in landlord and tenant relations.

8. How do I claim a tax deduction on my rental property?

There are several ways depending on your employment status. For instance, if you’re a PAYE wage or salary earner you could arrange for your employer to deduct less tax from your pay every pay period by lodging a PAYG tax variation form. Alternatively, you could simply receive a lump-sum rebate at the end of each tax year.

9. We’ve only got about 9 years to retirement, have we “missed the boat”?

Definitely not, no matter what stage of life you are at, by setting goals now and planning ahead, you will prepare yourself for whatever opportunities and obstacles that may present themselves along the way.
For most mature people, the greatest fear is that they will live longer than their money. Fear of poverty is the number one fear from which

the majority of people suffer. Sadly, so few take any action to prevent poverty or are blissfully ignorant of what the future holds for them.

There are six main reasons why 93% of the population do nothing about tackling their fear of poverty and they are:

· indifference

· indecision

· doubt

· worry

· overcaution

· procrastination

People don’t plan to fail, they fail to plan!

Most people wish for wealth, but few have a definite plan and the burning desire which pave the road to wealth.

We have absolute confidence that by joining us in the next stages of your learning and planning program, you will increase your knowledge and ability to be among the 7% of the population who plan the road to independent wealth.

10. What will happen if negative gearing is abolished?

When the government did this in the 1980s, rents went sky-high, unemployment rates in the building and allied industries soared and waiting lists for public housing grew significantly. Such was the negative effect of this decision that after 18 months, the government re-introduced negative gearing. It is doubtful negative gearing will be abolished again.

11. What if my partner doesn’t want to risk the family home?

People usually say ‘No’ because they don’t understand. Our free consultation will show both of you how you can save on tax and retire early with a substantial, ongoing, tax-free income. Your investment property will actually safeguard your home, which will be costly to maintain by the time you retire.

12. Do I have to get deeply involved if I invest in real estate?

Property Investment Services Group is suited to the needs of time-poor people. Our dedicated team provides you with additional assistance. This is instrumental in providing you with most of the assistance you require, thus minimizing your involvement.

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