Drew Meredith and Jamie Nemtsas, certified financial planners from Wattle Partners, join Owen Rask on The Australian Investors Podcast to walk us through how they would manage the $2.3 million retirement portfolio of a fictitious couple, Fiona and Craig.
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Drew Meredith and Jamie Nemtsas, certified financial planners from Wattle Partners, join Owen Rask on The Australian Investors Podcast to walk us through how they would manage the $2.3 million retirement portfolio of a fictitious couple, Fiona and Craig.
This episode is filled with great insights around portfolio construction
, investment planning, investment property, retirement strategy, risk profiling, lifestyle goal setting, investment returns
and more.
The hypothetical couple: Craig & Fiona
- The fictitious couple Jamie and Drew are working with are:
- Craig (62). Earning $125,000 per year as an mechanical engineer, PAYG.
- Super: Craig has $850,000 in super, currently maximising his SG. He has a balanced strategy and pays $5,500 in insurance inside super. Super has returned 6.6% over the past 10 years.
- Fiona (55). A Business Development Manager for a technology company, earning $110,000, plus $10,000 in bonuses, PAYG.
- Super: She has $670,000 in super. She has a balanced strategy and pays $3,500 in insurance inside super. Super has returned 5.4% over the past 10 years.
- Craig (62). Earning $125,000 per year as an mechanical engineer, PAYG.
Their current situation:
- They have $100,000 left on their mortgage and the house is worth $880,000.
- Have two adult-age children, who are self-sufficient.
- Both believe they are high-risk investors, but Craig is more conservative and keen to replace his income with defensive positions (as much as possible).
- Fees on their super funds are estimated at 1.2% per year.
- They have $450,000 in managed funds and shares.
- They have $300,000 in cash.
- They estimate they need $80,000 to live comfortably.
- Craig’s super insurance covers him for $190,000 (life & TPD) and his income protection is only $4,000 per month.
- Fiona’s super insurance covers her for $260,000 (life & TPD) and her income protection is only $3,000 per month.
Craig & Fiona’s goals:
- Both of them and want to get advice on these things (specifically):plan to retire in 3-5 years
- They want to be debt-free before retirement. Should they use their cash for this?
- Craig is thinking of buying an investment property for yield, just before retirement.
- Need to build an investment portfolio capable of helping them live sustainably, but don’t know if their super fees and strategy are right.
- Want to have cash to feel secure, so they want to maintain a decent buffer.
- They’d rather be ‘hands off’ investors and leave it to the experts (funds, ETFs, etc.).
- Don’t need to leave anything to the kids.
Here are the questions Drew & Jamie need to answer
- How does the financial planning process work at Wattle Partners?
- When you meet with Fiona & Craig, what are 3-5 questions you would ask first?
- Insurance:
- What are some factors Craig & Fiona need to consider? (assume they have no material prior medical conditions)
- Should they drop their insurance?
- Investment property:
- Is Craig ok to think of residential property as a source of good yield?
- What would be an alternative?
- Investing:
- What goes into a risk profile? (generally)
- What are some simple super strategies they could consider to boost their balance? (co-contribution, super guarantee limits, NCCs, etc.)
- Should they put their super on a platform or go with an SMSF?
- Should they build a portfolio outside super?
- ETFs or funds?
- What would be the mix (SAA) or risk-on to risk-off at Wattle for a higher risk investor?
- What are some examples of funds or strategies in each ‘bucket’?
- What should they do with their cash versus mortgage goal?
- Would you consider ESG as part of their investment process?
- What are some of the risks you’ve identified in their situation (goals, risk profile, conflicting strategies, etc.)?
Watch the video version on the Rask Australia YouTube page.
Date recorded: 15 September 2021
