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A Master Strategy
** WARNING: This is long ! :o **
This is the general Master Strategy that I shall be using. Feel free to post your own or comment on this strategy.
As for credit of this strategy.. it goes to a man called Ed Burton. Yes, I went to his seminar and can attest that it is not all hype.. it isn't a 'feel good' seminar... it was purely informative. He is a very genuine guy with alot of integrity (his actions recently have proved this to be true). I highly recommend him.
I'll also update this thread sporadically about how I am travelling along this Master Strategy... what I have done and how it is benefitting me etc.
Please be aware that this is focused more for Australians even tho' there are aspects to this strategy that can apply to anyone.
Before I continue, I will cover a few terms I shall be using:
Risk Taker: The person who is at a high risk of being sued. ie Husband works in medical field and wife works in a bank: the husband is the Risk Taker.
Risk Averter: The person who is at a low risk of being sued. ie Husband works in medical field and wife works in a bank: wife is the Risk Averter.
Cosmetic Renovations: examples are mowing the lawn, new coat of paint, adding a car-port, etc.
SMSF: Self Managed Super Fund or Superannuation that is managed by you (not a "Super Fund").
Asset: Something that provides you with an income where the money works for you. ie property investment, shares, offshore investing, etc.
MRS: Mail Redirection Service - only applicable for Offshore Investments
Here we go....
1. Protect Your Current Assets
- Sell half the house to the Risk Averter
- The Risk Averter resigns as director of the company
- Buy assets in trust
- Sell assets to trust or cross securitize
- Sell business to trust or service trust
2. Reduce Your Taxes
- Declare all your expenses and allow the accountant to decide whether deductable or not
- Non-Assessable Deductions
- Non-Cash Deductions (ie Depreciation)
- Double Deductions (only good for Employer-Employee relationships*)
- Reassess last 4 year's tax returns (give yourself a reverse audit)
- Company or Trust to split income (so you are taxed at a lower tax rate)
*Employer-Employee relationships includes even those who are the BOTH employer and employee
3. Invest
Find out about the various types of investment vechiles ie shares, property, offshore, etc. Investigate them and determine for yourself in which order/percentage you will invest in each. This only applies to those who see themselves using property then offshore as their main forms of investment vechiles.
Property Investments
- Equal to or greater than 6.00% gross rent
- Equal to or greater than 8% growth (in the selected area/postcode)
- Built after 18 July 1985 (this in re: taxation)
- Suitable for cosmetic renovations
Offshore Investments
- Investigate websites for investment*
- Set up MRS then Broker then Bank/Securities
- Obtain Prospectus
- Invest (small amounts at first until you are sure you want to invest larger amounts)
(*I will post the website links I was recommended from Ed Burton if requested)
4. Open up SMSF
- Claim all legitimate expenses (even the setup fee)
- Take out life insurance / sickness and accident / total and permanent disability (either or all three as they are allowable tax deductions if done through a SMSF)
- Invest money or Use SMSF as a vechile to "learn" about investing
5. Set up Investment Structure
- Set up company/trust structure for short-term investments
- Set up company/trust structure for long-term investments
- Claim all deductions
- Distribute income to best advantage (lowest tax payer aka Risk Averter or Bucket Company if single)
6. Purchase $1 million positively geared property
- Purchase 1 extra house per year for 3 years (after first initial purchase) or a combination of these (example: purchase 1 in first year, 2 in next year, 1 in third year and so on)
7. If over 55 in 4 to 12 years - part 1 of 2
(a) Sell houses for $1.5 million equity - pay tax
(b) Invest remainder (after tax) through SMSF into:
.. Covered calls
.. Shares
.. Offshore
.. Mutual Funds
.. Property Trusts
Retirement age in Australia is 50 for females and 55 for males - this is the soonest one can access one's Superannuation.
8. If over 50/55 in 4 to 12 years - part 2 of 2
Pay yourself $100 000 allocated pension per year
9. If under 55 in 4 to 12 years
- Do as per step 7 part 1a
- Don't put money into SMSF (it's invisible money and hence useless to you until you are closer to your respective retirement age)
- Distribute profit to lowest beneficiary (ANYONE who can be a Risk Averter not necessarily a 'blood' relative)
- Beneficiary to lend moeny back into trust (from where it came from)
- Trust (NOT SMSF) then invest as per Step 7 part 1b
- When YOU reach retirement age (50/55 years old) repay loan to beneficiaries who will then put it into your own SMSF then do Step 8 (as you are at retirement age)
Then that is it !
If you have any questions, I would love to answer them as best as I can with the information that I have (which is ALOT). Yet I strongly recommend for you to best benefit from THIS Master Strategy to go to one of Ed Burton's seminars. He goes into ALOT more details about each of these steps in the Strategy at the Seminar.
Feel free to comment on the strengths, weaknesses, etc of this 'Master Strategy'... I'd love to hear constructive feedback ;D
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Re:A Master Strategy
Fortunately for Australian residents, income tax laws and enforcement procedures there have not yet followed US trends. Here in the USA, having more than $10,000 in offshore investments of any kind will get you an x-ray vision audit. Here in the USA, joint tax filing status and joint liability for debts wipes out most any value of redistributing assets between husband and wife. Here in the USA, the overhead involved with setting up and maintaining trusts, and the extra tax scrutiny resulting from the existance of a trust, compromise its value as well.
If these things are still legal in AUS, jump onto the bandwagon fast before the government changes the laws !
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Re:A Master Strategy
While the person may have used the meanings he applied to them consistently, his definition of risk aversion is nonstandard. A risk averse person is a person who will not take a bet of equal expected value, ir would not buy a lottery ticket for $1 for a one in 20 chance to win $20. or would buy insurance for a $20 loss with a 1 in 20 chance of happening,
This is not to dispute his strategy in any fashion, but merely to prevent anyone from misusing the expression and looking silly.
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Re:A Master Strategy
It is such a shame that things have tightened up in the USA.. I must admit that is one good thing about being Australian then. I can still do all the above (the master strategy) without too much hassle.
Also, monty... thank you too. I feel that ultimately you are both speaking about the same type of person (in re: Risk Averter). Just that he (Ed Burton) added in the fact that the RA would have less chance of being sued in his definition.