How to achieve investment independence

Are you faced with a retirement investment decision and don’t know where to turn? The National Information Centre on Retirement Investments (NICRI) is a great place to start. Basil La Brooy highlights some of the ways NICRI can help you on your way to investment independence.

Carol recently contacted NICRI as she was considering the options available to her mother who needed to enter assisted aged care.  Her mother receives a superannuation pension, owns her home, which she has maintained well, and is also on an Age Pension.  The family home is valuable, not only financially, but from a sentimental perspective as well.

In addition to the issues Carol is facing in relation to her mother, she also needs to understand her own options, as she is hoping to retire in the not too distant future.  Now single, following the death of her partner, she has some funds in superannuation and some non-superannuation assets, as well as her own home.

 These types of questions are regularly raised with NICRI, as frequently people are not aware of the options available to them, do not understand the recommendations made to them, or the reasons behind the recommendations.

NICRI has now been in existence for 22 years and provides information directly to consumers about the options, investments and strategies available to achieve their objectives.  This is done firstly through a toll-free phone-line where anyone can call in and talk with NICRI staff about the issues with which they are dealing. The staff at NICRI are able to effectively discuss and explain investments and strategies people could consider or those recommended by advice providers.  Importantly, the traps and other negatives of the investments and strategies are also discussed and explained.  Understanding the downsides and how they can be managed will ensure a much better outcome.

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The telephone conversations are backed up with a range of well-written publications, which can either be posted to the caller or be downloaded from the NICRI website as a PDF document.  These publications cover most investment products, structures and strategies recommended or used, in addition to issues consumers should consider and address.  The publications include The Financial Planning Process, Estate Planning – things to consider, Account Based Income Streams, Mastertrusts and Wrap Accounts and Negative Gearing, to name but a few.  While recommendations are not made, they seek to give the reader a factual understanding of what the products are designed to do, how they work and the costs associated with the products.  They also explain how the products affect assessment for Government Income Support and taxation.   Many are single sheets, though there are some booklets as well.

For example, many users of Account Based Income Streams are not aware that the products are designed to use up capital over the time the income stream is paid and this is the reason why the products receive concessional treatment under the Income Test for pensions and allowances.  The Financial Planning Process booklet assists with selecting a financial planner and preparing to meet with them.  Going through this process would help in employing an adviser and ensuring a good relationship is developed.  Alternatively, it would enable a person to develop their own plan should they choose to follow that course.

NICRI’s newest booklet is Estate Planning – things to consider.  Many of the decisions Carol and her mother make could impact not only on her mother, but also on Carol.  While fortunate that her mother has all her faculties, ensuring someone has been granted an Enduring Power of Attorney may enable finances and other needs to be more readily met.  Sadly, there are many stories where such authority has been abused.

In Carol’s mother’s case, if her superannuation pension was through an account-based product, cashing it out to pay a bond could adversely affect her overall income and costs, depending on what other assets she held.  Similarly, paying the bond in full could create unnecessary assessment of her home as an asset in the progress of time, not taking into account the opportunity cost of lost income from exempt rental income.

NICRI also offers guest speakers to address community groups and organisations.  NICRI is a strong advocate of providing copies of the presentations delivered to the audience, in addition to other literature on the subject covered so they have a record of the information to act as a memory prompt.

Armed with the answers to the questions raised and informed of other options, Carol and others in similar positions are able to determine with greater clarity their own objectives and the avenues and opportunities available to them to achieve their goals.

Written by Basil La Brooy

NICRI is a government funded, independent consumer agency providing information to the general public on investment products.

Prior to acting on information provided in NICRI articles, it strongly recommends you confirm details in relation to your personal circumstances with any relevant government department.

If you require further information on investments, superannuation, income streams or the financial planning process please contact NICRI toll free on 1800 020110, email [email protected] or write to PO Box 1339, Fyshwick ACT 2609. NICRI information leaflets are also available on its websites: www.nicri.org.au or moneymap.nicri.org.au.



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