Creating Wealth that Lasts Beyond You
There are few things that give us more professional satisfaction than being able to work with families and businesses over a long period of time, to help them growth their wealth. Many factors come into play for this: tax minimisation, correct structures, clients running successful businesses, then helping with investments for surplus cashflow. It’s an ongoing journey and one we’re privileged to be a part of.
So what does it take to ensure sustainable and long term wealth creation?
Surplus cashflow. Whether it’s earned from wages personally or generated through a business, if there’s nothing left over after all bills are paid, there won’t be anything to build with. Ensuring there’s a surplus (by spending less than is earned) will give you the initial starting point.
Tax minimisation and correct structures. If there’s surplus cash after the bills are paid, the next step involves reducing tax leakage where possible. Thought needs to be given to this though, as not all deductions are created equal. It’s also worth noting that a greater focus should be placed on what to do with the remnant cash after tax has been paid, than on saving every dollar of tax. Using the right investment and business structures are extremely important for this step. Whether it be a partnership, a trust, a company or super, each option offers pros and cons that can assist in tax minimisation at the right time.
Investing the surplus for long term growth. The final step is considering where to invest the surplus cash. Don’t forget that debt reduction also falls into this category as it will ensure you own a bigger portion of the asset being held. Investment considerations include how much risk you’d like to take on, whether or not you’d like your investments to be truly “passive” along with liquidity and timeframe factors. This step of the journey should be fluid and continue to evolve over time as needs and preferences change.
The final piece of the puzzle involves bringing family into discussions for the purposes of providing education and also assistance. Each family is different and this should be a path that’s tread carefully, with individual family members in mind.
So what can you do today to secure tomorrow? Make a start!