What we do
We always aim to create long-term relationships with our clients. That means we have to be genuine, curious and have fun.
What we do
1. The Five-2 money diet
Most people underestimate their spending by around 30%.
Do you think you can either save for a house for a holiday, but not both?
Do you think you have to choose between reducing debt and having fun?
We’ve found that having less than five bank accounts spread across less than 2 banks, makes managing money hard and unpredictable.
A minimum five bank accounts across 2 banks makes managing money easy.
The Five-2 money diet is based on psychology, not maths, because it’s a way to stick to a budget, which includes fun, holidays and property.
Our money coaching programme is designed to help you implement the five-2 money diet, to permanently prevent money worries and put you in control of your own destiny.
2. Income Protection
Getting into debt to buy property, normally involves proving your income.
What happens to your income if you become sick or injured?
For the first half of our working lives, our biggest asset is typically our ability to earn an income.
Take a 30 year old, earning $100k/year. With another 37 years left to work, earning capacity is $3.7m.
A 52 year old, earning $150k/year has only 15 years left to work, or $2.25m in earning capacity.
We offer income protection insurance through a range of insurers, but it’s an area where we choose to help with the purchase, but not offer advice.
Income protection insurance typically covers up to 75% of total income INCLUDING super, for up to 50 years, or until you reach age 70. It can also be indexed so the payment increases with inflation every year, should you be unfortunate enough to have to make a claim.
Regardless of the insurance provider you choose, you can pay for the bulk of it either from your super fund, or from your own pocket.
3. Property Plan
Property is incredibly expensive to buy and sell, with stamp duty when you buy and agent fees if you sell, costing around 7% of the value of the property.
We focus on your long term needs, which can change predictably over time. There are 3 Lifestage needs for people who don’t have children and 5 for those who do.
- wondering if it’s better to buy a home or investment?
- Wanting to upgrade to a bigger home and would like to keep your current property as an investment?
- A home-owner and want to secure your financial future by investing in real estate?
- Wanting to add to your investment property portfolio?
We love to help people build a property portfolio to become financially free. We also love helping people buy strategically, so that each property can be kept as needs change.
Financial Freedom is when you can cover your living expenses with passive income, so you have the choice on whether or not to work.
BUT… if you don’t know, or can’t control your living expenses, then how can you set a target to cover them with passive income?
We can’t help you with this step, if you haven’t implemented a solid budget structure, like the five-2 money diet.
We all know Australians love property and investing in real estate is a financial strategy used by many of us.
Some key benefits include ongoing returns in the form of regular rental income, increases in the value of property over time (capital growth) and possible tax advantages. If you have existing equity in your home, you may be in a position to use that equity as a deposit for an investment property.
With an investment property, rental income helps to cover a large portion of loan repayments and property expenses. If an investment property is positively geared, that is, the income exceeds the costs of owning the property, you will have positive net cash flow.
In a negatively geared situation, any extra costs you have to cover, can reduce the tax you pay on your employment income. Ideally over time, the value of the property goes up, building a strong asset for your financial security.
It is always important to remember that property investment, as with any investment, carries some risk so proper education, planning and due diligence are paramount. We cannot give tax advice but can recommend tax experts that we work closely with.
Let us help you become a confident property investor!
4. Mortgage Advice
To buy property, it’s possible to get a loan from a bank, a transactional broker, or a value-added broker
Banks typically give little advice on mortgages, other than how much you can borrow and whether you want fixed or variable.
They certainly won’t tell you that one of their competitors has lower fees, better rates, or offers multiple offset accounts.
Transactional brokers are easy to spot, with their slogans about ‘lowest rates’. Their aim is to win your business based on rate, without looking at the lifetime cost of a particular product or lender.
It’s unlikely that banks or transactional brokers will explain the risks of offset accounts, the risks of fixed rates, or why offset and redraw are very different things. They also rarely tell you when a little higher deposit could save you a fortune in mortgage insurance.
At Golden Eggs, we focus on adding value to our client to make sure we are meeting their short and long term needs, before narrowing our search for the best rate.
Value-added brokers first educate their clients on the different options available, their relative costs and risks and then get the best loan structure in place. They can always negotiate the rate if the lender with the best structure for your needs has higher rates than others.
But either way they’ll give you education and advice before locking you into a product or lender.
Buying property is inherently risky and the more we buy, the more risk we are exposed to.
The first step to risk management, is recognising that our own spending has a big impact on our ability to borrow money and reduce debt. Go back and check out the Five-2 Money Diet to permanently fix this problem.
The next step is realising that all borrowing requires an ability to repay the debt, so it’s imperative that we all insure our incomes.
Research is our next best friend, to avoid buying a dud property, or a great property in a dud area.
– SQM is a great source for trends for any city or suburb, including vacancy rates.
– Realestate.com.au suburb profiles give a quick overview of average prices by property type and size for a suburb. Plus if you click through “trend” and then “annual” you can see price trends in that area. It’s also great for quickly switching from one suburb to another nearby.
– Google is also fantastic for searching population trends for a city or area and using the maps to figure out how far a suburb is from a city centre.
Buyer’s agents are a great way to mitigate risk in the purchase process. Beware of people posing as buyer’s agents or buyer’s advocates who recommend new build property, as these are normally acting for the seller.
Off-the-plan properties are a special risk category in their own right. The biggest problem is signing a contract today and finding that in 1-3 years time when the property is finished and ready to settle, that the bank values it for less than you paid. You will then have to pay the normal 10-20% deposit PLUS 100% of the difference between the price and the valuation. eg. You sign for $900k and on completion the bank says it’s worth $800k. You may have planned to borrow 80% of $900k = $720k and put in $180k as a deposit, but the bank will now only lend 80% of $800k = $640k, so you have to cover the gap of $900-$640k = $260k.
The biggest ways to reduce all of the risks is to quickly build a massive buffer and reduce debt. Keep in mind the focus should always be on paying off non-deductible debt first – in other words focus on building savings for and paying off the long term family home, before paying off any long term investment properties. This is true even if you live in the property in the short term.