Methodology

Foundational portfolio

Our goals based advice process works to build your foundational portfolio. This process is broken down into 3 phases. Laying your foundation, build your structure and reap the rewards. What stage you are in depends on your financial situation but the end goal is the same, to develop a portfolio to fund your lifestyle. This is an overview of some of the key points.

Laying your foundation

  • Set and maintain a budget; create surplus cash-flow through living within means
  • Set long term lifestyle goals i.e. How much does your ideal lifestyle cost in today’s dollars?
  • Build deposit towards first investment property (target $75-$100K)
    • Alternate option is to demonstrate savings track record and utilise parents equity to act as guarantor for deposit gap
  • In Superannuation utilise employer contributions to build a growth focused portfolio (Australian & International Shares/ETFs)
  • Review your estate plans

Build your structure

  • First Property – Own Home or Rent-vest?
    • Owning your own home is lifestyle decision. Use cycles knowledge to determine if it is a good time in cycle to buy family home. For example, If you live in Brisbane the time to buy might be different than if you lived in Sydney
  • Continue to buy capital city rental properties, utilising the growing equity to the point where gross assets are sufficient to sustainably fund lifestyle (once debts paid off).
    • 5% rule. For example $2m of assets for $100Kpa lifestyle costs (combination of income & capital growth)
  • Maximise concessional contributions to super
  • Deploy all surplus cash-flow (after concessional contributions) towards debt reduction between property purchases (either offset account or paying down loan/s). Your capacity to purchase each additional investment property will be a combination of capital growth & debt reduction
  • Regularly (annually at a minimum) review your budget & lifestyle goals
  • Cycle considerations – there will be times to pause the growth strategy to ensure debts are manageable through market downturns and ensure you are not over extended

Reap the rewards

  • You now have a self-sustaining portfolio funding your lifestyle, where work is optional
    • Your choice – pay down debt or keep building!
  • Aggressive/ambitious investors may want to continue to grow their assets base
    • You can now consider more speculative investments such as developments, commercial property, private equity/venture capital, alternative assets (eg cryptocurrency, precious metals etc)
  • Continue to maximise concessional contributions while still employed, up to $1.6m cap (per individual)

Starting Out

Lay your foundations

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Accumulator

Build your structure

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Retiree

Reaping the rewards

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Investment methodology

Flack Group’s knowledge and understanding of how the economy moves through a repeatable, scientific process of Boom then Bust enables us to advise you on your investments.

By combining this knowledge with your goals and life stage we are able to work with you to establish your own economic cycle action plan.

We apply our intricate knowledge of this process to provide dynamic advice on both your asset allocation and investment strategy depending on your specific circumstances, where we are in the cycle and what we expect to occur next.

Dynamic investment advice is provided to clients on property and share market investments within the context of the Flack Group Economic Cycle Action Plan.

By understanding how the business and investment cycles interact and what to expect during different times in the cycle, allows us to make decisions based not on emotions but upon sound economic theory.

Economic cycle action plan

This chart is based on predictive models which rely on certain assumptions including but not limited to, the market continuing to revert to the mean as defined by the Vagg Composite Line. That the cycle drivers of technology, infrastructure, population, credit & government granted licences will continue to drive and manifest in an investment and credit cycle. That future investment cycles will continue to behave in the same or similar manner as past cycles. These models may have limitations. Known and unknown risks and other uncertainties may arise which impact the assumptions used in the modelling. This may result in expected estimates and timing being materially different from actual outcomes. Calnan Flack and associates make no claim or guarantee as to the future accuracy or reliability of these models. Past performance is not necessarily a guide to future performance and should not be relied upon for this purpose. This chart does not purport to be financial advice and does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether it is appropriate to you and whether you should act upon it. Should financial advice be sought, we suggest you seek such advice from an appropriately qualified advisor. Authorised Representatives of PGW Financial Services Pty Ltd – AFSL 384713. ©Copyright 2021 All Rights Reserved—Prepared by Jeremy Calnan & Ian Flack.