Ever walked into an Audi showroom and breathed in the nostril tingling smell of brand new German sports cars? The paint is so deep and rich the cars look like stunning jewels waiting patiently to be adopted by their new owners. In fact, the sensation isn’t that dissimilar to the plush surrounds of a posh jewellery store where the carpet is thick, the lighting is just so, and all the items for sale are so brilliant and shiny you almost need sun glasses.
Alas, you won’t be making a purchase at either showroom, because, well, you can’t afford it – at the moment. But you know what? You work hard for your money, and perhaps you deserve the spoils even more than the uber-wealthy clientele of these establishments.
You see, us Average Aussies don’t quite fit into this world of flash cars and 5 carat pink diamonds, nor do we want to. Most of us are more interested in real life—family, kids, good mates, our favourite team. You know, the fun stuff. It’s what makes us real people. But there are a few things that the rich get that we all should get: smart advice on money and the tools to help us make the system work in our favour.
For a second, imagine you’re a cosmetic surgeon rolling in cash, charging huge bucks for nips and tucks. You work 10-hour days enhancing cup sizes and the like and make around $400,000 a year. You come from a well-to-do family plus you’ve been grafting for a while so have managed to amass a bit more than $5,000,000 ($5m) in ‘investable’ financial assets (assets excluding the family home). For this example, let’s say you own a decent house in Malvern worth around $4m with a $2m mortgage hanging over your head. You’ve engaged an adviser at Big Mac Private Banking (a fictitious bank, in case you were wondering) who has agreed to manage your money for you while you do what you do best: tuning up the bodies of wealthy women.
The investment banker charges 1% of your net financial assets and a performance fee. On $5m that’s a minimum of $50,000 that you’re paying to have an expert manage your money. You then invest in a whole range of investment products even the adviser doesn’t understand including such fantastically confusing money holes like leveraged forex trading, global equity geared hedge funds and a lot of other nonsense. BUT the adviser does one very smart thing: he gets you into a debt structure where the interest rate on your non-deductible debt (your mansion) is minimised and the interest rate on the deductible debt (everything else) is dialled up to compensate. The net interest rate evens out to be approximately the same (so it works okay for the bank) however two very powerful things happen for your money:
- Because the interest rate on the home is minimised, less interest is paid meaning more of your regular repayments and ALL of your spare cash go towards paying down the principle on your home, thereby dramatically reducing the principle of the loan which determines the amount of interest paid. What happens? Every dollar you earn is maximised and your mortgage (bad debt) is paid down quickly, leaving more money to invest or save.
- Because the interest on your investment debt is slightly higher, you make a slightly greater contribution to owning your invested assets during the course of the year because there is more interest to pay (we call that ‘forced savings’ and it serves to keep discretionary spending in check). HOWEVER, your tax refund covers that contribution and when you get your refund you slam it straight onto your rapidly diminishing mortgage.
So now you have some serious power going on with your money. You’ve got a huge amount of money invested, making you even more money, while being forced to curb spending and contribute more of your pay to those investments. But, most importantly, more of your money is going where it ought to go: towards your mortgage!
Are you picking up what we’re putting down? Because the great thing is, you don’t have to be a multi-millionaire cosmetic surgeon to benefit from these financial strategies. You’re probably not interested in ‘money’ or budgeting or saving, or researching products that will help you manage your money better and get ahead; and you just feel like you’re spinning your wheels and worrying about the size of your mortgage. So where on earth do you start to get the advice you need to put these necessary strategies into place?
Well, right here with Clover Partners, of course. We’ve been dealing with Aussie mums and dads for years and helped more than two hundred families get ahead. What they tell us is that they want three things; to own their home, own an investment property, and have something to give to their kids. And they want to get on with their lives. Clover Partners has put together a loan-reducing product for them that structures their finances in exactly the same way as the investment banker did for your surgeon alter-ego. We reckon it’s unfair that this kind of not-so-technical loan product is the preserve of the rich and somewhat famous.
With the Rate Reducer loan product, we’ve been able to help ordinary Aussie mum and dads—previously bum-steered by their bank and mortgage broker—to actually pay off their mortgage faster and even afford to own an investment property to provide the financial security they look forward to in retirement.
Bottom line: IPH can get your home loan down as low as 2% and provide the tools you need to pay off your mortgage sooner. We can set you up so you can own your home faster, invest in property and take control of your money so it will take care of you when you stop working.
Before you too excited, though, almost but not quite everyone will qualify for this exciting new product. To find out if you’re eligible, simply drop us a line and we’ll be happy to discuss your individual circumstances.