Economic volatility, fluctuating tax laws, and varying investment strategies create wealth management issues in Australia. Yet, a recent survey shows that 57% of Australians are unwilling to pay for financial advice.
Establishing a solid financial plan to manage wealth effectively over the long term is crucial. As such, the cost of partnering with a financial advisor who can provide guidance, assistance, and reliable information is ultimately worth the investment.
Mike Sikar, the founder and principal financial adviser of Delta Financial Group, shares how Australians can structure and grow their wealth in the most tax-effective ways for a lot less than they think.
Wealth structuring the Delta Financial Group way
Sikar suggests that Australians should establish the structure of their wealth before taking steps to grow it. Achieving this involves diversifying investments across different asset classes and considering tax implications when making investment decisions.
By gaining a solid grasp of the fundamentals of wealth structure, Australians can confidently make informed choices and work towards their long-term financial goals. Financial advisors can also help people determine how to build wealth and keep it under control.
There are various tax-efficient strategies available for maximizing wealth growth in Australia in 2023. One such strategy is investing in superannuation. Income earned in super usually has a maximum tax rate of 15%, while capital gains are taxed at 10%. Salary sacrificing into super is also a popular tax-effective strategy as super contributions are taxed at a concessional rate of 15%, which is lower than the lowest marginal tax rate, resulting in tax savings.
Additionally, the main residence capital gains tax concessions are a valuable tax break for building personal and family wealth, especially for individuals with a taxable income between 50k and $250k tax brackets, due to the super tax rate of 15% versus marginal tax rates.
Strategies for Maximizing Your Wealth According To Mike Sikar of Delta Financial Group
Sikar’s favorite strategies for maximising your wealth in 2023 and setting up for retirement follow many of the leading financial planners in Australia. His top 7 tips are as follows:
- Utilise tactics that work best with high-interest rates. Some examples of this are qualified personal residence trusts and charitable remainder annuity trusts.
- Determine the amount of money you need for retirement by estimating your yearly expenses. The Association of Superannuation Funds of Australia (ASFA) recommends singles should have a yearly income of $29,139 to support a modest lifestyle and $45,962 for a comfortable lifestyle. For couples, the recommended yearly income is $41,929 for a modest lifestyle and $64,771 for a comfortable lifestyle.
- Make voluntary contributions to your superannuation account to take advantage of tax benefits. This strategy is especially helpful for those earning a higher-than-average income.
- Develop a superannuation strategy that can provide you with a regular income after you retire. Australians, on average, can expect 20 years of retirement.
- Consider the bucket strategy, which divides your retirement savings into three categories: short-term, mid-term, and long-term. This strategy can help you better manage your cash flow and income during retirement.
- Determine the best retirement income distribution strategy for you. Some options include the 4% rule, which involves withdrawing 4% of your retirement savings each year; systematic withdrawals throughout retirement; and delaying Social Security payments as long as possible.
- Take advantage of all allowable tax deductions, which can reduce your taxable income and tax liability. Consider maximizing your voluntary superannuation contributions as a long-term wealth creation strategy.
Taking a strategic approach to wealth management
There is no universal approach to wealth structuring and maximization. Australians should take a comprehensive and strategic direction, including seeking professional advice, (such as Mike Sikar’s financial planning firm Delta Financial Group) considering tax-efficient investment options, and regularly reviewing and adjusting their financial plan to meet their needs and objectives.
Mike Sikar and Delta Financial Group offer personalised guidance and support to help Australians achieve their financial goals through a comprehensive and strategic approach to wealth structuring and maximization. By working with them, Australians can feel confident and empowered in their wealth-building journey.
