Meet Karl
Challenge:
Save $100k a year and invest for the future
- Mining Executive
- Earns $450,000 pa
- Extremely busy, lots of international travel
- Not good at managing money
- Too busy to think about it
- No savings
Karl is an extremely successful Mining Company Executive, who lives in the moment. By his own admission, he has always been terrible at managing money and is more focused on life than planning for the future.
Solution: Karl needed some help to get control over his finances, acquire assets and build wealth. Our first step was understanding Karl and together we agreed on a strategy that would work for him. While it sounds a little extreme, Karl agreed that Snelleman Tom would take control of his cheque book and give him a monthly allowance that fits in with his lifestyle. We paid Karl’s bills and appointed a bookkeeper to record timely and accurate information. This allowed Karl to be more disciplined and develop a better understanding of his financial situation.
Once Karl achieved his first goal of saving $100k, he was able to use this money for a deposit on a house. We were able to assist by taking into account asset protection issues and the most effective tax environment. Also, by dealing directly with the lender, Snelleman Tom negotiated a better rate on the home loan. Later, equity from the home went straight into a negative gearing strategy.
Karl also required legal assistance and Snelleman Tom introduced a solicitor into the relationship. Here we addressed the issues of purchasing his home and setting up a binding financial agreement with his partner, to protect Karl should the relationship break down.
The remaining funds went into superannuation and an investment portfolio, which was set up in such a way to meet Karl’s interests in being actively involved in the share market.
Seven years later Karl still lives in the moment and is well on his way to becoming financially independent. He also has a greater understanding of investing and budgeting and when he chooses to retire he knows that it will be in a style to which he has become accustomed.
When you stop for a moment to think about it…
Karl is not alone in struggling to build wealth. We all know people on great incomes who don’t accumulate the investment assets you would expect. The difference is that the plan that we designed was implemented. It’s easy to dream, the hard part is making it happen. That’s what we do at Snelleman Tom.
