Benton Asset Management

1. Benton Asset Management Newsletter Spring 2009 Liquid Gold – Would you invest in wine? Now who hasn’t thought of investing in wine…picking up a few bottles of your favourite drop, popping them in the cellar and selling them for some ridiculous price 10 years from now. Making money out of wine is tempting but wine sellers and buyers alike admit investing in wine is High Risk. Some “experts” advise that only those who don’t like drinking wines should invest in them (for obvious reasons) and the investor should be passionate, have patience and perseverance in abundance. If you are tempted, then you’ll need a few “essential” items. The obvious being a good quality cellar…and some suggest a lock (again for those who may be tempted to sample along the way). But just as important is knowledge. Know what you’re buying and why. Considered a benchmark for classifying Australian wines, Langton’s List was first published in 1991 and is today considered an essential tool for anyone serious about investing in wines. The mere omission of a wine from its list can substantially increase the risk factor. So if you think investing in wine is for you, be smart…do your homework and know your market. Here’s cheers to you! Going Green for Speed! The usual “eco-friendly green car” advertisements usually hold little charm for the majority of people. Yes, we like the idea of owning a “green” car, but when push comes to shove there are a variety of reasons we still buy the usual petrol, or more recently seen diesel cars. But, with Volkswagen’s recent acquisition of Porsche operations, there’s a hybrid in the works that’s just as fast as a 911 and more fuel efficient than America’s favourite eco car the Prius. When eco becomes trendy, you can bet it’s going to impact the way our investment world is hinged. But don’t worry, this will likely take decades. The slow and at times reluctant move away from petroleum products will happen, but just not today, and maybe not even in our lifetime. Consider this: If the world’s governments were to suddenly move away from the traditional energy sources too quickly, the would economy would not only collapse, it would likely nose dive into an abyss. Money circulation would almost certainly cease sparking mass job and lifestyle losses inevitably leading to poverty on a massive proportion. As the saying goes, step by step, day by day. Baby steps are good. They enable the construction of a solid foundation upon which change can be sustainably built. We are but creatures of habit. In this issue Is wine the next liquid gold? Investing in wine –alternative high risk investments become glamorous. Going Green for Speed! Realising the tide of change and how it will effect investing patterns over then next 20+ years Get yourself a decent umbrella for those rainy days An oldie but a goodie – staying protected through the good and the not so good times Anti-detriment Payments Claiming back the taxes levied against your superannuation contributions Benton Asset Management ABN 50 108 049 556 AFSL No. 273228 Tony Chiu P +61 2 9283 2282 F 9283 2232 PO Box 609 Alexandria NSW 2015 Suite 8 Level 6 321 Pitt St Sydney NSW 2000 Benedict Or P +61 2 9419 3889 F 9419 3736 PO Box 133 Chatswood NSW 2067 Suite 1 Level 1 414 Victoria Ave Chatswood NSW 2067 www.benton.com.au All Enquiries + 61 2 9283 2282 info@benton.com.au

2. Benton Asset Management Get yourself a decent umbrella for those rainy days I know we’ve had this one before, but it’s really important and there are still too may families, many of whom we see weekly on the news, who fall victim to financial hardship through inadequate protection. Life Insurance and Income Protection are critical for anyone who has a family and debt. But the big obstacle is affordability. You not only need the right amount of cover, but the insurances needs to be affordable now and also when you’re 40, 50 and even 60 years of age. One solution, if household finances are already stretched, is to take out the insurance through super. The problem here is that the regular deduction of premiums can eat away at your retirement benefits. The way around this is to salary sacrifice the cost of the insurance premiums into your super. For those earning an income, we mostly pay between 31.5% and 46.5% income tax. Salary Sacrifice contributions are taxed at 15% so if you were to salary sacrifice the premiums, you would effectively be paying less tax now and preserving your retirement dollars. The second, and by no means less important consideration, is taking out insurances on Level Premiums. Unlike the traditional stepped premiums that increase each year with your age, Level Premiums start out a little more expensive and mostly increase in line with inflation each year. But the big bonus with Level Premiums is that over the life of the policy you can potentially save tens of thousands of dollars. For those on lower incomes, making the premium payment via a personal contribution may also be suitable as there will be benefits from the Government’s co-contributions. This works equally well for homemakers or part-time workers where spouse contributions will also attract a rebate. With the right combination of factors, there is no reason why you can’t get the right amount of cover for you and your family without breaking the bank. If you are considering taking out insurances through super, make sure you are aware of any tax that you may be liable for at pay-out. Snap-Shot: Anti-detriment Payments An anti-detriment payment is an additional amount that may be paid in the event of a superannuation member’s death. The payment is restricted to lump sum death benefits and represents a refund of contribution taxes levied against the deceased member’s superannuation entitlements during their lifetime. It is not a separate payment in its own right, but forms part of the overall death benefit payout. Who Qualifies? Qualification is limited to lump sum payments paid in favour of a spouse, ex-spouse or child (including adult child) Do all Super funds offer the payment? No. The payment is not compulsory, though more and more super funds are offering this additional payment. How will the payment be calculated? The payment cannot exceed the actual contribution taxes levied against the deceased member’s account and is based upon the contribution taxes levied against the deceased member’s contributions during their lifetime. How will the payment be taxed? Where tax is payable, it is usually capped at 15%. A spouse, ex-spouse, child under the age of 18 and a financially dependant child of the deceased will not be taxed upon receipt of the lump sum death benefits. Please Note The information in this newsletter is not financial advice and should not be relied upon when making decisions about your financial future. Benton Asset Management Pty Ltd is an independently-owned financial planning practice. Our advisers are fully certified, each having more than 10 years experience in providing financial, investment, risk management and taxation advice to individuals, business owners, companies and superannuation trustees. Benton Asset Management is a Principle Member of the Financial Planning Association of Australia. Benton Asset Management ABN 50 108 049 556 AFSL No. 273228 Tony Chiu P +61 2 9283 2282 F 9283 2232 PO Box 609 Alexandria NSW 2015 Suite 8 Level 6 321 Pitt St Sydney NSW 2000 Benedict Or P +61 2 9419 3889 F 9419 3736 PO Box 133 Chatswood NSW 2067 Suite 1 Level 1 414 Victoria Ave Chatswood NSW 2067 info@benton.com.au www.benton.com.au Should you have any questions, or require further information, please contact our office