Case study: How Centuria LifeGoals became Mark and Sue’s bespoke solution
At 45 years old Mark and Sue commenced a Centuria LifeGoals investment strategy. Having sold an investment property that was becoming time consuming and costly to manage they combined this with their savings to start their investment off with $250,000. They began a regular contribution plan of $1000 per month for the first year which increased by 10% per annum, investing in a growth option.
With the investment held jointly in both names, Mark and Sue nominated both children as beneficiaries of the fund. If something was to happen to them on their travels the funds would go directly to the children with no tax payable.
As Mark is a small business owner, some of his assets may not be protected from creditors, however the funds in the Centuria LifeGoals structure are protected. And unlike residential property there are no significant transaction fees involved.
After 10 years, Mark and Sue have contributed a total of $441,249 and the value of their Centuria LifeGoals is now $584,057* after tax and fees. As they have met the 125% rule throughout this investment period, they can now commence a regular withdrawal over the next 10 years. After tax this calculates to around $5,728* per month but will still be accumulating during this time, amounting to a total of $687,360*.
Importantly, they still had the option to withdraw money before the 10-year point was reached if their circumstances changed. If the investor withdraws money in year eight (or earlier), all of the earnings on the withdrawal are assessable when it comes to tax. However, for withdrawals during the ninth year only 2/3 of earnings are assessable and during the tenth year only 1/3 of the earnings are assessable.
Mark and Sue will be able to fulfil their travel dreams in a tax effective manner. For a couple who have worked very hard for many years raising their children and building successful careers, the flexibility and tax efficiency Centuria LifeGoals can provide in addition to their superannuation contributions will provide them with the early retirement option they deserve.
This scenario has been produced purely to illustrate how Centuria LifeGoals can be used by different investor profiles and are is fictional.
1. In years 9 & 10 this difference is discounted by one-third and two-thirds respectively.
*The investment returns are calculated using the LifeGoals Investment Forecaster Calculator, which can be accessed on the Centuria website (centuria.com.au/investment-bonds/investment-forecaster-tool/). Please refer to the calculator’s “Returns Calculation Assumptions” for the assumptions used in calculating the investment returns figure.
The investment returns are illustrative in nature and should not be taken to provide an estimate of the amount of investment earnings you will receive. The actual returns may differ to the calculated returns. Centuria does not guarantee the performance of the financial product, the repayment of capital or any income or capital return.