Jeremy Duffield

Jeremy Duffield is a senior player in the Australian and international financial services sectors, having served as a senior executive with leading global funds manager The Vanguard Group USA from 1980 to 2010. He founded Vanguard’s operations in Australia and Asia, and led them from 1996 to 2010. Jeremy is Chairman of the Australian Centre for Financial Studies and is a non-executive director of MLC, National Wealth Management and Plum Financial Services. He is a member of the Federal Government’s Australian Centre Financial Task Force and was previously a member of the Financial Sector Advisory Council and the Financial Literacy Foundation. He was also Deputy Chair of the Financial Services Council.
You can’t take it with you, but you can leave it behind

You can’t take it with you, but you can leave it behind

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After the recent (disastrous for Biden) Trump-Biden debate, Poland’s top diplomat tweeted “It is important to manage our ride into the sunset.” And another commentator said, “We can’t beat Father Time; he’s never been defeated.”  

Good reminders that we must plan for the inevitable, don’t you think?  Given the financial implications for our loved ones, it is important for us all to plan out our estate.  Principle #8 in our series is We all die at some point.  Make sure your estate is ready.

There are four particular topics to focus on:

First, the importance of having an up to date will.

Second, ensuring your beneficiaries for your super fund are set up right

Third, the so-called “death tax” on super.

Fourth, leaving a legacy.

Paying attention to costs and taxes can improve your retirement

Paying attention to costs and taxes can improve your retirement

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If you depend on a water tank to provide your water during a long hot summer, the last thing you want is for it to have a number of leaks.  It’s the same for your retirement nest egg – your savings and super.  If it’s going to provide you with lifetime income, you have to protect it against leakage from paying away too much in costs.

So, retirement funding Principle #7 is: Costs and taxes matter.  It’s generally better to have less of them. 

It’s a simple idea.  Returns on your investments add to your retirement resources.  Costs of investing and taxes reduce your resources.  

What’s complex is that it’s often hard to appreciate how much costs and taxes can impact you; there are many different types; and they’re often hidden below the surface.

Be prepared!

Be prepared!

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In previous articles, we’ve talked about how it’s tough to plan your retirement due to uncertainty about future investment returns…and inflation.  In Part 3, we showed how the amount you can spend depends on what you earn on your investments. Problem is: no one knows what investments will earn in the future.

So Principle 6 for retirement spending is:  You need to be prepared for a range of outcomes.

Surprisingly, most financial advisers act as though they know what’s going to happen in the future.  They  give you a projection of your ability to spend based on an assumed rate of return over the next 25 or 30 years.  It’s a bit of a “pretend game” – let’s pretend we know what the return will be.

But while the assumption used might be a reasonable estimate, actual rates of return will be different…and perhaps by a lot.

The reality is that investment returns vary significantly, and unpredictably, not just year by year but decade compared to decade.  We can see that by showing the returns in past decades.  This chart gives the annualised rates of return for 4 major asset classes in each of the decades since the 1970s and the 1920s so far.