What follows is the first in a series case studies which will discuss some of the people we work with. The articles will look at the issues and concerns they have faced, and how we have assisted them build on the success they have already achieved. Please note that while they are based on actual scenarios, the details have been changed to protect their privacy.
Successful, established careers
Peter and Linda are two Staff Specialists in their early 40’s. Peter is an Anaesthetist and Linda works in Emergency Medicine. Peter’s income is $400,000 including Private Practice billings, while Linda earns $290,000. Peter realises he could earn more in private practice, however he is comfortable with his income and the security and flexibility that working in the public health system provides.
They have two young girls aged 10 and 8 years old. While they currently attend their local primary school, both are booked in to attend a private school for their high school years. Their home is valued at $1.5 Million and they have repaid their mortgage.
Both are making the maximum Pre-Tax Superannuation Contributions, and have accumulated $250,000 and $180,000 respectively. They have $150,000 in cash but no other investments .
Working hard, but getting ahead?
Peter and Linda’s came to me because they were comfortable, but didn’t feel like they were maximising the financial position they had reached. Since they repaid their mortgage they felt like they were coasting and didn’t have a clear direction or plan for what they should be doing to take advantage of their position. They also felt guilty about indulging their passion for travel, as they were worried this would stop them saving enough for their retirement.
They were cautious about investing as they have no experience and little free time to devote to managing any investments – they also have very little interest.
How things changed…
What we did for them:
- We were able to help them map out their long term objectives and estimate the cost of meeting them. Based on these costings, we were able to model their cashflow and asset position under different scenarios to develop a comprehensive plan that would allow them to meet their objectives while still indulging their passion for travel.
- Established an investment portfolio using available cash and surplus cashflow that reflected their long term plans and their comfort with risk. While they held strategic oversight, the day to day management of their investments were outsourced to minimise the impact on their free time.
- Implemented an appropriate risk management strategy to protect their most valuable assets in case of a disaster.
Outcome: Financial goals and clarity
We were able to develop a model for Peter and Linda which incorporated the costs of all of their long term goals. We showed them how investing their surplus cashflow would build an investment portfolio sufficient to fund their objectives, and that their passion for travel would not compromise this. This meant that on a daily basis they had only one issue to focus to achieve their objectives – ensuring they remained in control of their cashflow. We also showed them how all of this could be done with minimal demands on their limited free time.
They are now comfortable that they are on track financially and that they don’t have to worry about this aspect of their lives.
