Empowering Australians to Make Smarter Financial Decisions

In this scenario it is forecast that you will have a cashflow surplus of $8,483.31 for the 4 months to 30 June 2026. In the first full year you are projected to have a $31,058.54 surplus which will then grow to:

• A $30,689.48 surplus at the end of 10 years.
• A $62,528.80 surplus at the end of the projection period.

In this scenario at the end of the first financial year you are projected to have total assets of $921,598.15. This is the projected to:

• Increase to $2,135,747.81 at the end of 10 years ($1,710,153.85 in today's dollars) .
• Increase to $5,367,326.39 at the end of the projection period ($3,357,411.42 in today's dollars) .

In this scenario at the end of the first financial year you are projected to have a total superannuation balance of $60,530.18. This is the projected to:

• Increase to $375,257.96 at the end of 10 years ($300,479.69 in today's dollars) .
• Increase to $1,235,224.93 ($772,667.43 in today's dollars) at the end of the projection period.

Based on your current repayment schedule and any allocation of surplus cashflow towards your debt it is projected that you will be able to repay your debts as follows:

Mortgage - 1 Default Street: NAB Mortgage

• This will be repaid in 10 years compared to your goal of 10.75 years
• Over the life of the loan it is projected you will make $379,344.36 in repayments of which $92,344.36 will be interest payments

HECS HELP Loan - Jane

• This will be repaid in 17 years
• Over the life of the loan it is projected you will make $43,743.71 in repayments
• This loan is projected to be subject to $8,743.71 of interest/indexation over the life of the loan

Strategy Overview

This Scenario looks to increase your regular debt repayments throughout the year with any surplus income. This occurs as follows:

1. Additional debt repayments are made in order of highest to lowest (after tax) interest rate
2. Additional debt repayments are made first to non-deductible debts and then any deductible debts
3. Following all debts being repaid the surplus is then directed according to your stated preference

By making additional debt repayments you can both reduce the time it takes to repay the loan and the total interest cost over the life of the loan. A loans repayments are calculated such that it will be repaid exactly in the loan term, any additional repayments directly repay the principal and this compounds to reduce the cumulative interest you will be required to pay over the life of the loan.

Mortgage - 1 Default Street: NAB Mortgage

By increasing your repayments to the amount projected it is projected that:

• This will be repaid in 7 years compared to 10 years in the base scenario
• The total interest paid over the life of the loan will be reduced by $34,399.85 from $92,344.36 in the base scenario to $57,944.51.

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected decrease in your net investment position of $1,377.50 ($-1,103.00 in today's dollars) from $506,333.56 to $504,956.06.
• Under the projected strategy, at the end of the projections there is a projected decrease in your net investment position of $3,989.84 ($-2,495.75 in today's dollars) from $2,186,434.68 to $2,182,444.84.

Strategy Overview

This strategy invests in line with the investment portfolio detailed in your DHHF Investment Goal.

Cashflow Allocation

For the purposes of projecting this scenario, any cashflow surplus each year is used to purchase investments that will be individually owned.

Ownership Considerations

You should also evaluate whether a different ownership structure might provide a more optimal outcome. Ownership arrangements can significantly impact the tax treatment of investment earnings, estate planning, and asset protection. Key considerations include:

• Other Ownership Structures:
  Other structures, such as trusts or holding companies, may provide advantages in estate planning and asset protection as well as offer additional tax planning opportunities. These options can facilitate income splitting and/or reducing tax on earnings. However, they often come with greater complexity and setup costs, so it’s important to weigh the potential benefits against these factors to ensure the structure provides meaningful advantages.

DHHF - Betashares Diversified All Growth Etf

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected increase in your net investment position of $8,816.71 ($7,059.80 in today's dollars) from $506,333.56 to $515,150.27.
• Under the projected strategy, at the end of the projections there is a projected increase in your net investment position of $47,970.45 ($30,006.85 in today's dollars) from $2,186,434.68 to $2,234,405.13.

Strategy Overview

This strategy invests in line with the investment portfolio detailed in your DHHF Investment Goal. Any available cashflow surplus will be combined with additional borrowings through a margin lending facility to enhance investment opportunities.

Gearing Considerations

Gearing, or borrowing to invest, is typically suitable for investors with a high risk tolerance, a long-term investment horizon, and the ability to manage both borrowing costs and potential margin calls. While gearing increases the amount available for investment and can amplify returns when investment gains exceed borrowing costs, it also magnifies losses if the investment underperforms.

Margin lending facilities come with the risk of margin calls, where you may need to provide additional funds or sell assets if the value of investments falls below a set threshold. Additionally, margin loans often have higher interest rates than other forms of secured debt, such as home loans.

Investment Allocation and Gearing

For the purposes of projecting this scenario, the assets are assumed to be individually owned.

In addition to this surplus, additional funds are drawn from a margin lending facility, based on a 50.00% Loan-to-Value Ratio (LVR) and a 10.00% interest rate, as outlined in the Lending Assumptions.

Ownership Considerations

You should also evaluate whether a different ownership structure might provide a more optimal outcome. Ownership arrangements can significantly impact the tax treatment of investment earnings, estate planning, and asset protection. Other structures, such as trusts or holding companies, may provide advantages in estate planning and asset protection as well as offer additional tax planning opportunities. These options can facilitate income splitting and/or reducing tax on earnings. However, they often come with greater complexity and setup costs, so it’s important to weigh the potential benefits against these factors to ensure the structure provides meaningful advantages. Additionally, if the investments are geared, these structures may be less suitable, as the deductions for interest expenses are typically limited to the income within the trust or company, preventing you from offsetting the costs against your personal income.

DHHF - Betashares Diversified All Growth Etf

Strategy Investment Portfolio Margin Loan

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected increase in your net investment position of $50,394.99 ($40,352.71 in today's dollars) from $506,333.56 to $556,728.55.
• Under the projected strategy, at the end of the projections there is a projected increase in your net investment position of $290,526.97 ($181,732.68 in today's dollars) from $2,186,434.68 to $2,476,961.65.

Strategy Overview

This strategy invests in line with the investment portfolio detailed in your DHHF Investment Goal. Any available cashflow surplus will be invested utilising debt recycling to repay debt faster while simultaneously investing to grow your wealth.

1. Repaying Debt with Surplus Income:
   Surplus cashflow is first used to increase your loan repayments, focusing on non-deductible or partially deductible debts. This occurs as follows:
   • Debts with the highest after-tax interest rate are repaid first.
   • Non-tax-deductible debts are paid off first, followed by partially tax-deductible debts.
   • As the strategy prioritizes repaying non-tax-deductible debts, fully tax-deductible debts are kept on their current repayment schedule. Additionally, the income from the High-growth investment is not reinvested to increase the available cashflow.
2. Creating a Tax-Deductible Loan for Investments:
   If you have a mortgage that isn’t fully tax-deductible, we create a new loan (or split your existing loan) that can be drawn down for investment purposes:
   • The new loan will only be used for investing, ensuring the interest is fully tax-deductible and segregated from other non-deductible debt to make administering your tax easier.
   • The new loan is structured as interest-only, allowing more cashflow to pay off non-deductible debt faster.
3. Recycling Debt for Investments:
   As you repay the principal on your mortgage, the same amount is re-borrowed from the new investment loan and invested. This is called “debt recycling” because it reuses your debt for investing while reducing your original mortgage. For the purposes of projecting this scenario, the assets are assumed to be individually owned.
4. Using Your Surplus After Debts Are Paid Off:
   Once all non-deductible and partially deductible debts are repaid, surplus cashflow is directed based on your borrowing capacity and loan-to-value ratio (LVR):
   1. If you have an offset account and have the borrowing capacity to increase your lending without additional costs (such as lenders mortgage insurance), your surplus is first directed to the offset account. An equal amount is then drawn down from the associated investment loan and invested in the High-growth investment.
      • While not essential to the strategy, this approach provides flexibility. You can access the funds in the offset account for large personal expenses, such as buying a car, upgrading your home, or purchasing a holiday home, while minimizing the need for non-deductible debt.
      • An alternative to this approach, if you'd prefer to eliminate all interest expenses, is to direct all surplus cashflow into the offset account. Once the investment loan is fully offset, you could then begin investing further using the same methodology. While this may not be financially optimal if the expected return from investments exceeds the interest rate, it offers a path to debt elimination for those who prioritize being debt-free.
   2. If no offset account is available, surplus cashflow is directly invested in the High-growth investment.

Gearing Considerations

Gearing, or borrowing to invest, is typically suitable for investors with a high risk tolerance, a long-term investment horizon, and the ability to manage borrowing costs. While gearing increases the amount available for investment and can amplify returns when investment gains exceed borrowing costs, it also magnifies losses if the investment underperforms.

Debt Recycling has several benefits compared to gearing with through a margin lending facility. As the loan is a mortgage secured by a property rather than a margin loan secured by the underlying investments there is no risk of a margin call. A mortgage will also more often than not have a lower interest rate than a margin loan.

Ownership Considerations

You should also evaluate whether a different ownership structure might provide a more optimal outcome. Ownership arrangements can significantly impact the tax treatment of investment earnings, estate planning, and asset protection. Other structures, such as trusts or holding companies, may provide advantages in estate planning and asset protection as well as offer additional tax planning opportunities. These options can facilitate income splitting and/or reducing tax on earnings. However, they often come with greater complexity and setup costs, so it’s important to weigh the potential benefits against these factors to ensure the structure provides meaningful advantages. Additionally, if the investments are geared, these structures may be less suitable, as the deductions for interest expenses are typically limited to the income within the trust or company, preventing you from offsetting the costs against your personal income.

DHHF - Betashares Diversified All Growth Etf

Mortgage - 1 Default Street: NAB Mortgage Debt Recycling Balance

Mortgage - 1 Default Street: NAB Mortgage

By increasing your repayments to the amount projected it is projected that:

• This will be repaid in 2 years compared to 10 years in the base scenario
• The total interest paid over the life of the loan will be reduced by $79,448.85 from $92,344.36 in the base scenario to $12,895.51.

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected increase in your net investment position of $72,670.30 ($58,189.18 in today's dollars) from $506,333.56 to $579,003.86.
• Under the projected strategy, at the end of the projections there is a projected increase in your net investment position of $138,814.75 ($86,832.48 in today's dollars) from $2,186,434.68 to $2,325,249.43.

Strategy Overview

This strategy is designed to maximise your contributions to superannuation. For projection purposes, all existing personal contributions to superannuation and salary sacrifice arrangements are disregarded, with surplus cashflow prioritised for contributions in the following order:

1. Additional Concessional Contributions:
   Whenever possible, contributions are made through salary sacrifice to reduce the tax withheld by your employer, providing smoother cashflow throughout the financial year. If salary sacrifice is not feasible, personal contributions are made, which will require submitting a Notice of Intent to Claim for Personal Super Contributionsbefore lodging your tax return.
2. Additional Non-Concessional Contributions
3. Your surplus cashflow is then directed in accordance with your existing preferences.
4. In all cases where you have multiple funds, contributions are made to the fund with the highest projected returns.

Benefits of Concessional Contributions:

• Immediate Tax Advantages:
  Concessional contributions (including Salary Sacrifice and Personal Deductible Contributions) are taxed at 15% within the super fund (30% for high-income earners with adjusted incomes above $250,000). This can result in significant tax savings if your marginal tax rate is higher than 15%.
  • For example, if your marginal tax rate is 32.5% or higher, making concessional contributions can save you up to 17.5% in tax on the amount contributed.
  • It is important to note this will not affect government payments as it is added back when your income is tested.
• Unused Cap Carry-Forward:
  If you have unused concessional contribution caps from the previous five financial years and your total superannuation balance is below $500,000, you can make larger concessional contributions in a single year. This is a strategic way to manage tax or boost super balances. For the purposes of these projections concessional contributions are maximised as early as possible, you should evaluate if there is a more optimal way to utilise any carried forward contributions.
• Boost Retirement Savings with Pre-Tax Dollars:
  Concessional contributions allow you to grow your retirement savings using pre-tax income, which means you have the potential to accumulate a larger superannuation balance over time with less immediate financial impact compared to using after-tax funds.
• Continued Contributions Beyond Balance Limits:
  As long as you meet the work test (for those aged 67 to 74), you can continue making concessional contributions regardless of your superannuation balance. This provides greater flexibility to grow your retirement savings compared to non-concessional contributions, which are restricted once your balance exceeds the general transfer balance cap, currently set at $1,900,000.

Negatives of Concessional Contributions Compared to Non-Concessional Contributions:

• Tax on Contributions:
  Concessional contributions are taxed at 15% within the super fund (30% for high-income earners with adjusted incomes above $250,000). While this is lower than most marginal tax rates, non-concessional contributions are not taxed upon entry (since they are made with after-tax dollars).
  • Division 293 tax: If your income exceeds $250,000, you may be subject to an additional Division 293 tax, which effectively increases the tax on concessional contributions from 15% to 30%. This reduces the relative tax advantage for high-income earners.

Implementation of the strategy

This strategy has been modelled based using the contributions detailed below

Projected Contributions

Projected Tax Savings

• Under the projected strategy, this financial year there is an expected reduction in personal income tax of $1,937.69, with a total tax reduction (including superannuation tax) of $374.54.
• Under the projected strategy, over 10 years of projections there is an expected reduction in personal income tax of $70,395.17, with a total tax reduction (including superannuation tax) of $45,834.64.

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected increase in your net investment position of $111,586.31 ($89,350.32 in today's dollars) from $506,333.56 to $617,919.87.
• Under the projected strategy, at the end of the projections there is a projected increase in your net investment position of $584,453.69 ($365,591.99 in today's dollars) from $2,186,434.68 to $2,770,888.37.

Strategy Overview

This strategy is designed to maximise your contributions to superannuation. For projection purposes, all existing personal contributions to superannuation and salary sacrifice arrangements are disregarded, with surplus cashflow prioritised for contributions in the following order:

1. Additional Non-Concessional Contributions
2. Additional Concessional Contributions:
   Whenever possible, contributions are made through salary sacrifice to reduce the tax withheld by your employer, providing smoother cashflow throughout the financial year. If salary sacrifice is not feasible, personal contributions are made, which will require submitting a Notice of Intent to Claim for Personal Super Contributionsbefore lodging your tax return.
3. Your surplus cashflow is then directed in accordance with your existing preferences.
4. In all cases where you have multiple funds, contributions are made to the fund with the highest projected returns.

Benefits of Non-concessional Contributions:

• Non-concessional Contributions are not subject to a contributions tax:
  Non-concessional contributions are made with after-tax dollars and are not subject to a contributions tax when received by the superannuation fund. This provides an advantage compared to concessional contributions, which are taxed at either 15% or 30% for high-income earners.
• Not subject to Division 293 tax:
  Unlike concessional contributions, non-concessional contributions are not affected by Division 293 tax, which applies to high-income earners with adjusted incomes above $250,000.
• Greater ability to contribute funds:
  Non-concessional contributions offer a more flexible option to make larger super contributions in a single year, particularly if you wish to maximise your superannuation balance or access the bring-forward rule, which allows up to three years' worth of contributions (currently capped at $330,000 for eligible individuals) to be made in one financial year.
• Estate Planning Benefits:
  Non-concessional contributions are made with after-tax dollars and form part of your superannuation's tax-free component. Upon inheritance, these funds are classified as non-assessable, non-exempt income, meaning no further tax is payable.
  In contrast, concessional contributions form part of the taxable component, which can attract taxes upon distribution to non-dependents:
  • Taxable Component:Subject to a 15% tax plus the Medicare levy. Untaxed Component:Subject to a 30% tax plus the Medicare levy.
  This distinction can make non-concessional contributions a more tax-efficient option for estate planning, particularly when the funds are inherited by adult children who are no longer financially dependent on you.

Negatives of Non-concessional Contributions Compared to Concessional Contributions:

• No Immediate Tax Deduction:
  Non-concessional contributions do not provide an immediate tax deduction, unlike concessional contributions, which can reduce your personal income tax.
• Less Tax-Effective for High Earners in the Short Term:
  For high-income earners seeking immediate tax reductions, concessional contributions may offer better short-term benefits since they reduce taxable income.
• Restriction Due to General Transfer Balance Cap:
  Non-concessional contributions are not permitted if your total superannuation balance exceeds the general transfer balance cap, which is currently $1.9 million. This restriction limits your ability to further boost your superannuation balance through non-concessional contributions if you have already accumulated a significant amount in super.

Implementation of the strategy

This strategy has been modelled based using the contributions detailed below

Projected Contributions

Projected Tax Savings

• Under the projected strategy, this financial year there is an expected increase in personal income tax of $1,606.06, with a total tax increase (including superannuation tax) of $526.39.
• Under the projected strategy, over 10 years of projections there is an expected increase in personal income tax of $122,897.69, with a total tax increase (including superannuation tax) of $95,192.60.

Projected Benefit of Strategy

Projected Net Investment Position

• Under the projected strategy, over 10 years of projections there is a projected decrease in your net investment position of $92,552.98 ($-74,109.80 in today's dollars) from $506,333.56 to $413,780.58.
• Under the projected strategy, at the end of the projections there is a projected decrease in your net investment position of $194,741.20 ($-121,816.01 in today's dollars) from $2,186,434.68 to $1,991,693.48.