Wealth creation to achieve financial goals and improve retirement lifestyle

Without Debt Recycling

Lifestyle $73,000Interest $17,237Tax $35,429Surplus $24,334

WITHOUT

RMD$24,334

With Debt Recycling

Lifestyle $73,000Interest $15,503Tax $30,847Surplus $30,650

WITH

RMD$30,650

Is paying off your home sooner, one of your financial goals?

Are you concerned that your current investment strategy will not provide for your lifestyle choices in retirement?

Prospera’s Recycle My Debt may enable you to create additional wealth.

Introducing Prospera’s Recycle My Debt (RMD).

Prospera’s RMD is a powerful tool used by Financial Advisors to:

• quickly illustrate the financial benefits of a debt recycling strategy;

• create and compare multiple scenarios and develop a strategic financial plan to build wealth;

• make the adopted financial strategy easy to understand with graphics and detailed and accurate projections;

• track your progress against the plan.

Advantages for Financial Advisor Clients

Clients that implement an effective RMD strategy create wealth by recycling debt from a private line of credit (including mortgage) to an investment line of credit. In doing so they take advantage of the income and capital returns on their investments and the favourable tax treatment of investment line of credit interest payments.

Your advisor can also show you how other financial goals (like school fees, holidays, home renovations etc.) can be funded too.

Just ask for a Prospera RMD report and get started today.

Clear private debt from your home

2043 2033 10 years earlier

Total Wealth (excluding the family home)

Future: $1,992,957Today: $926,954

Future: $3,022,488Today: $1,405,804

ImprovementFuture: $1,029,531Today: $478,850

Key MeasuresCurrent

SituationWith our

RecommendationsWealth Creation

Benefit

KEY RESULTS ACHIEVABLE (SAMPLE STRATEGY)

RMD reports are elegant and simple to interpret in both tabular and graphical form. Most importantly, RMD facilitates:

• the investigation of any number of wealth creation scenarios

• the ability to remodel a wealth creation strategy when circumstances change.

For average wage earners with an average mortgage, the adoption of an RMD strategy can result in a significantly increased wealth position at retirement – based simply on existing debt servicing levels.

This can translate into a retirement income 30-60% higher than the client’s base-case scenario.

POTENTIAL INCOME AT RETIREMENT

Assets Target Current Proposed

Private

Cash $432,072 $5,000

Debt $0 $0

Investment

Assets $0 $1,300,247

Debt $0 ($284,121)

Super Funds

Accumulation Accounts $1,560,885 $2,001,363

Pension Accounts $0 $0

Future Value Summary

Future Value $2,181,147 $1,992,957 $3,022,488

Income $112,660 $105,986 $156,117

Present Value Summary

Net Position $1,014,484 $926,954 $1,405,804

Income in retirement $52,400 $49,296 $72,612

Sample strategy demonstrating wealth position at retirement. Annual retirement income improved 47% compared to client’s current strategy.

Summary of sample RMD outcome

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Proposed Based on

Implementation of RMD Strategy

Current Based on

existing savings & Investment

Strategy

Target Based on

Client’s Desired Retirement

Lifestyle

ANNUAL RETIREMENT INCOME

NET WEALTH (excuding Family Home)

$166,098

$166,098

$210,931

$210,931

$119,528

$480,992

$480,992

$563,572

$563,572

$370,579

$2,666,087

$2,563,218

$2,863,460

$3,022,488

$1,992,957

2049R

etiremen

t2033

2028

$0 $500k $1m $1.5m $2m $2.5m $3m $3.5m

Current Situation Result 1 Result 2 Result 3 Result 4

Ability to model multiple scenarios

Software Features

RMD is web-based, subscription software used by financial planners. It features a powerful calculation engine which is updated regularly to reflect tax and superannuation rule changes. Additional features include:

• an inbuilt debt-recycling strategy that models the transition of non-deductible home loan debt into deductible investment debt;

• the ability to model unlimited alternative versions of the RMD strategy and compare to your existing retirement forecast;

• easy-to-understand table and graph-based reports to support goal-centred conversations between advisers and clients;

• a monthly “Track to Plan” report that keeps you up-to-date on plan progress; and

• seamless integration of tax, investment income, investment capital growth, inflation, superannuation rules and cash flow into results.

Sample Track-to-Plan report

SURPLUS CASH FLOW BY FINANCIAL YEAR

Sample Track-to-Plan report

SURPLUS (CASH FLOW) – LAST 12 MONTHS

©2017 Prospera

Contact our Prospera team now T 1300 769 890 E info@prospera.com.au W www.prospera.com.au

Scenario Overview ReportFinancial Year FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 26/27 FY 31/32 FY 36/37 FY 41/42 FY 46/47 FY 48/49

Age - Adam 34 35 36 37 38 43 48 53 58 63 65

Age - Amanda 31 32 33 34 35 40 45 50 55 60 62

Personal Income

Adam 92,000 92,000 94,300 96,658 99,074 112,093 126,823 132,571 149,991 169,702 178,293

Amanda 45,000 45,000 46,125 47,278 48,460 54,828 62,033 56,148 63,526 71,874 75,512

Investment Income

Income Received 0 422 1,471 2,158 3,331 9,535 14,404 20,975 28,024 35,710 40,350

Interest Received 52 50 50 50 50 50 50 50 50 50 50

Outgoings

Tax (30,898) (28,968) (30,549) (31,467) (32,284) (37,524) (44,731) (44,612) (55,074) (68,033) (75,292)

Expenses (52,400) (53,710) (55,053) (56,429) (57,840) (65,440) (74,040) (83,769) (94,777) (107,232) (112,660)

Goals (8,000) (8,200) (8,405) (8,615) (8,831) (28,724) (32,498) (36,769) (41,601) (16,371) (17,200)

Insurances (750) (769) (788) (808) (828) (937) (1,060) (1,199) (1,357) (1,535) (1,613)

Super Contribs 0 0 0 0 0 0 0 0 0 0 0

Employee Contribs 0 0 0 0 0 0 0 0 0 0 0

Tax Dedct Exp (1,200) (1,230) (1,261) (1,292) (1,325) (1,499) (1,696) (1,918) (2,170) (2,456) (2,580)

Loan PMTs from Surplus 0 0 0 0 0 0 0 0 0 0 0

Net Cash Flow 43,804 44,595 45,890 47,532 49,808 42,383 49,286 20,501 46,612 45,999 44,511

Private Accounts

Open (388,500) (365,719) (339,460) (312,236) (284,796) (160,971) (48,036) 5,000 (1,848) 5,000 5,000

Net Movement 22,781 26,259 27,224 27,440 29,291 19,941 27,007 (2,124) 6,848 0 0

Close (365,719) (339,460) (312,236) (284,796) (255,505) (141,030) (21,029) 2,876 5,000 5,000 5,000

Investment Accounts

Open 0 (1,513) (34,404) (68,537) (103,914) (274,287) (381,119) (446,403) (455,520) (359,297) (309,527)

Net Movement (1,513) (32,891) (34,134) (35,377) (36,621) (18,861) (25,131) (13,438) 13,594 24,580 25,406

Close (1,513) (34,404) (68,537) (103,914) (140,535) (293,148) (406,250) (459,841) (441,926) (334,717) (284,121)

Investments

Opening Value 0 0 31,627 65,419 100,981 289,060 436,659 635,840 849,537 1,082,534 1,223,201

Additional Investment 0 31,200 32,400 33,600 34,800 16,800 22,800 31,775 0 35,710 40,350

Growth 0 427 1,392 1,963 3,029 8,672 13,100 19,075 25,486 32,476 36,696

Redemptions 0 0 0 0 0 0 0 0 0 0 0

Closing Value 0 31,627 65,419 100,981 138,811 314,532 472,559 686,690 875,023 1,150,720 1,300,247

Super Accumulation (Combined)

Opening Balance 75,000 88,548 102,738 117,883 134,037 243,019 400,264 612,908 1,023,611 1,579,804 1,852,585

Inputs 15,298 15,983 16,984 18,039 19,793 29,879 40,089 75,078 101,502 135,987 152,540

Outputs (Incl. Tax) (1,750) (1,794) (1,839) (1,885) (1,932) (2,186) (2,473) (2,798) (3,165) (3,581) (3,763)

Closing Balance 88,548 102,738 117,883 134,037 151,899 270,712 437,881 685,188 1,121,948 1,712,209 2,001,363

Super Pension (Combined)

Opening Balance 0 0 0 0 0 0 0 0 0 0 0

Inputs 0 0 0 0 0 0 0 0 0 0 0

Outputs (Incl. Pension PMTs) 0 0 0 0 0 0 0 0 0 0 0

Closing Balance 0 0 0 0 0 0 0 0 0 0 0

Family Home

Residence 612,000 624,240 636,725 649,459 662,448 731,397 807,521 891,568 984,364 1,086,817 1,130,724

Total Wealth

Excluding Home (278,683) (239,499) (197,472) (153,692) (105,331) 151,066 483,161 914,913 1,560,045 2,533,212 3,022,488

Including Home 333,317 384,741 439,253 495,767 557,117 882,463 1,290,682 1,806,481 2,544,408 3,620,029 4,153,213

Sample RMD Overview report