September Reflect: The WAF Factor

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Dear All,

So, my dreams of cavorting around the countryside in a homemade aircraft have come to fruition of late. Last week, with the girl safely ensconced at school camp, looking for gold in the hills of Bathurst, we disappeared for a few days – hoping to find a place with no mobile reception!

Trying to avoid my loved one’s prediction that we would be roughing it – because that is apparently what you have to do when exploring in a lightie – I trawled the Internet for a higher class alternative. Something that would avoid beige motel rooms that smell of fly spray was my aim.

My search was rewarded by finding this fabulous book of remote places to stay, which all have an airstrip! Who would have thought such a thing was available! So with the Pilots Touring Guide in hand, we ended up at Mungo Lodge, a delightful place 100km north of Mildura, run by a French family who seem to think they are still in Paris. Lovely French food and wine, and non-beige accommodation.

So what possible relevance does this have to anything tax or wealth related I hear you ask? Well it is about increasing what, in our house, is known as the wife acceptance factor or WAF. For political correctness I should state that this can be adjusted for your own circumstances.

The WAF is normally saved for the endless electronic devices Glenn brings home, and has been used to remove from the house hideous things like the remote that was supposed to remove the need for all the other remotes, but can equally be used for trips which could easily turn dodgy, and of course investments.

On the investment side we often see couples with similar goals, for example wanting to retire early on massive pensions, however often the level of risk that each is prepared to take to achieve these outcomes differ widely. One may want to do this by saving cash each month into an online saver account backed by a government guarantee, the other may want to experiment with high risk currency or options trading.

So rather than forcing one partner to do something they are not comfortable with, the way to increase the WAF ( or HAF) is by compromise. You know that if you want to achieve these lofty goals, then saving spare cash is not enough (and tends not to happen anyway) but one of you may not want to take on the entire risk of a share portfolio or rental property. One suitable option to consider may therefore be a geared portfolio of shares which have capital protection written into them or a non-recourse loan. This way you get the potential growth to achieve your retirement goals, without the downside risks. Or on the property side, you could consider a geared NRAS property.

With these options the WAF increases enormously and everyone is happy. Such portfolios and properties are available both in and out of super, so if you think this may be something you would benefit from further looking into, then get in touch.

Until next month,

PS: Another springboard diving competition for me at the weekend – wish me luck!!

PPS: This month’s tax newsletter is now on the website, click on the newsletter link on the homepage which you can access here. All those involved with an SMSF need to read at least the green box on page 4. Page 6 gives a nice guideline to business structures which would be useful for anyone you may may know starting up a business.

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