Dimensions of an Asset


In this article we will be breaking down the dimensions of an asset. The core two dimensions of an asset are the Income the asset generates together with the asset’s Capital Value and worth.

When viewing the Income dimension of an asset, we need to outline the three main Income producing asset categories:

Property: generating an income through the rental market
Shares: generating an income by paying dividends through the share market
Cash: will generate an income by paying interest

When focusing on the Capital Value dimension of an asset it is worth noting:

Property: the true capital value only known when the property
is sold
Shares: The capital value of a share is known on any given weekday
Cash: The capital value of cash does not rise or fall

At Income Solutions we believe that people focus too much on the Capital Value of an asset or investment and not enough on the assets Income producing capabilities.

If you concentrate on the first dimension of the asset, the Income it produces, you will have a far greater chance of building a Capital Base that will provide you with an Income to support your life…. forever!

For further details on the Dimensions of an Asset watch the following video by Income Solutions Advisor, David Ramsay: https://www.youtube.com/watch?v=AqlhNmYHjXw

Building a Lifestyle

The first step in planning for the lifestyle that you want to live is to build your capital base (the money and assets you own) to where it will not only fund your lifestyle in the short term but will generate enough ongoing revenue that your income will continue to build and be replaced, thus providing you with an income for many more years to come together with creating a foundation for intergenerational wealth.

In speaking to people about what is important to them many of their main priorities include.

~ Family
~ Travel
~ Home
~ Entertainment
~ Leisure

It is crucial to identify whatever it is that is important to you as this will assist you in answering the core vital questions, How Much? Where from? and When?

Whatever your answers to these questions maybe and whatever priorities you identify when answering these vital questions, remember you only get one shot at life and it is worth planning for!

For further details regarding planning for your Lifestyle click on the following video link to hear from Income Solutions Principal, David Ramsay:
https://www.youtube.com/watch?v=aRTS0u8L_w8

An Income for Life


Building your capital base is important as this is what will provide you with a passive, worry free, consistent and tax effective increasing income ~ An Income that will provide you with choices and options into the future for you and your family.
In looking closely at what makes up your Capital Base it is worth noting that typically your Capital Base comprises of one or more of the following:
~ Superannuation
~ Rental Properties
~ Term Deposits
~ Shares
An important point to make is that most people are focused on the capital value of their assets and often ignore the assets Income capabilities, but it is imperative to remember that it is the income provided by the asset within the capital base that provides you with ongoing funds and an income that will assist you with creating the lifestyle you choose.
When investing to build your capital base that will provide you with an income stream it is vital to consider that into the future ‘How Much is it going to take to do everything I wish to plan for’? Further, remembering that there are only 3 real asset classes that will produce an income, consisting of.
~ Cash
~ Property
~ Shares
Income Solutions has a proven and focused investment strategy that clearly details how our clients can build their capital base to increase and maximize long term income capabilities.
Please click on to the following short video title: ‘Building Your Capital Base’ to hear from Income Solutions Principal, David Ramsay providing further details:

https://www.youtube.com/watch?v=5U7UlZ_j52s

VITAL QUESTIONS TO A FINANCIALLY INDEPENDENT FUTURE

At Income Solutions we believe that there a three core questions that you need to answer in planning for a financially independent future.

The first of these questions is WHEN? When in your life and at what stage do you want the freedom to work because you want to and not because you must? Thus, allowing you to follow your passions and the opportunity of pursuing everyday what truly fulfils you.

The second of these questions is HOW MUCH? What is the income you will need to wake up each morning and live the life you envisage and provide you with the means to direct your focus and energy to what you care most about?

Lastly, the third of these questions is WHERE? Where is this income going to come from and how are you going to plan now for achieving this income stream into the future?

The above three questions are vital in planning your financial future, however if you are struggling to answer these questions don’t worry as over the coming eight weeks Income Solutions will be releasing a weekly series of short instructional videos to allow you to address clearly and in detail these fundamental financial questions.
Click on the following link to watch the first short video in this series titled: When?, How Much?, Where?
https://www.youtube.com/watch?v=P0TbiptGoZA

Stay tuned next week for video two titled : THE BEST INVESTMENT YOU WILL EVER MAKE

Shares made Tangible

Too often when we read about the share market or discuss topics concerning investment we are presented with a complexity and diversity of options and advice, but the key to successful investment in the share market can be straight forward and even simple!

One of the underpinning investment philosophies applied at Income Solutions was detailed in a book that was published in 2007 titled ‘The Little Book of Common Sense Investing by John C. Boyle’. Since this book was published the share market has tumbled and soared but the evidence over the last 13 years has shown that the principals applied and expressed in this book have endured and served investors at Income Solutions and more broadly very well.

The stated principal of investing in the All Industrial Index allows people to invest in a wide range of publicly listed share market stocks and then leave it alone. What a lot of us may not realise is the companies that we are investing in are already part of our everyday lives and the following diagram provides an example of how:

This table demonstrates that by investing is the Industrial Index you are investing in companies and products that provide a platform for our lifestyles. Also featured is ‘the good, the bad and the ugly’ as by mentioning ABC Learning Centre’s we demonstrate it is not always ‘oranges and sunshine’ and sometimes companies do fail, but a lot do not and continue to thrive and provide investors with dividends and returns. The following table shows a snap shot of some of the companies in the All Industrial Index.

When a company may not be doing so well such as Qantas at the moment other companies may be thriving such as Woolworths, demonstrating that investing in shares doesn’t have to consist of prediction and expertise. Applying the principal of keeping it simple and investing in the All Industrial Index has proven over time to be a sound and effective long term option for investors.

BUDGET LIKE A BUSINESS

A budget is key to running a financially responsible business and equally a budget is key to running a financially responsible household. It is irrelevant whether you are a single person living alone or a parent with a large family, or if you are a well remunerated executive or getting by on a students allowance, the fact remains the best way the manage your finances is to know exactly what money is coming in and what money is going out.

Reviewing your budget every few weeks allows you to monitor what money you have coming in against what money you been spent for that period, clearly showing you if these figures are in line with the projected figures you budgeted for at the beginning of the financial year. This approach allows you to adopt a mindful and considered approach to the money you are spending and categorizing what may be viewed as essential such as electricity and car insurance against what expenditure may be seen as a discretionary, such as a choice to enjoy an expensive dinner, buy an item of clothing or for those on a limited budget to decide whether they buy their lunch each day or make their own.

Being mindful of the money we spend allows us to make informed decisions about the choices and lifestyle we want to live both now and into the future. We can choose whether we want to save and travel in 2 years or whether we would prefer to purchase a membership to the AFL Club that we support. Either is fine, but by mapping a budget we can make decisions that we have thought through and provide us with the best use of our funds, without a budget we might simply bounce around from option to option and make decisions that we really haven’t thought through in any detail.

Monitoring the budget we put in place each financial year empowers us to see if our expenses are gradually creeping up in any one area and may prompt us to make that call to the bank to get a better rate on our mortgage or shop around for a better rate on electricity. To be able to accurately detail the income we have coming in to our individual household may inspire us to look at ways that we can increase this amount by perhaps investing in further education or look at the business or job opportunities which could be available to us. Otherwise, a budget can simply give us peace of mind knowing our finances are on track!

One of the many benefits of a budget is that it provides us with a format to think logically and clearly about the ‘business’ of running our households and by dedicating a relatively small amount of time each financial year to set and detail a budget, together with a few moments each fortnight to track income and expenditure, we are providing ourselves with the information that we require to make well thought through everyday financial decisions.

Click on the following link to be inspired by Income Solutions client Wayne Lucas speaking on how he Budgets, the tools he uses and the benefits it has provided:

How do I make ends meet if I am on JobSeeker and still save money for a rainy day?

https://togetheraustralia.com/ask-an-adviser/how-do-i-make-ends-meet-if-i-am-on-jobseeker-and-still-save-money-for-a-rainy-day/

Tharaka Leeniyagoda, Financial Advisor at Income Solutions Geelong responds to Emily’s Question: How do I make ends meet if I am on JobSeeker and still save money for a rainy day? Click on the above link

Grow your tree and pick your fruit

https://vimeo.com/460822636

As spring in now here and some of us are beginning to see our gardens with new eyes, especially as we witness blossom beginning to form on fruit trees, the analogy of an apple tree that Income Solutions applies to building a capital base easily comes to mind.    

The capital base that we build through an investment in our self, career or business provides us with the tree that will grow the fruit that we can pick to become our income into the future.    This income will allow us to take a holiday, help children and grandchildren or spend money on projects or opportunities.      

At Income Solutions we believe that it makes sense and is more beneficial to pick the fruit off your tree, your capital base, rather than lopping a limb off your tree when you require an income.    Income Solutions has been committed to this financial concept for over 30 years, building our clients capital base has allowed our clients to enjoy long term fruits and generational wealth rather than a short term view that can, over time deplete and eventually kill their capital base and income. 

In growing your tree, your capital base, Income Solutions believes that the roots should be firmly planted in a consistent, reliable, tax effective, worry free ‘soil’ that provides you with an income for life!   

This concept has allowed our clients to find the joy in the process of what they are growing, whether it is their capital base or their fruit trees.   There would be little joy in waking up each day and stressing over whether nature has blown a few leaves to the ground, and the same applies to our capital base, what is the joy in stressing every day in the short term movements of shares?  Which by their very nature will move up and down on a daily basis.    

Income Solutions has continued to grow and thrive by working with clients to invest in a capital base that provides long term harvests that they can savour and benefit from into the future, rather than the feast and famine approach of short term speculation.   

Please click on the following video to hear from David Ramsay, Financial Advisor at Income Solutions detailing how this investment philosophy can work for you:  https://vimeo.com/460822636

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