Georgia and Michael: Strategic Wealth Management for a High-Net-Worth Couple

Georgia and Michael, both in their early 50s, are high-net-worth individuals with a substantial portfolio. They own a $4.2 million home in Malvern, and have significant investments, including lifestyle properties valued at $7 million (a farm, holiday home in Noosa, and an apartment in Sydney) with a $1.2 million debt across their investment property portfolio. Their financial assets include a $1.5 million term deposit, $300,000 in cash, an $800,000 share portfolio, and a combined superannuation balance of $2.8 million. Their business, valued at over $10 million, generates annual income exceeding $2 million, though they have no plans to liquidate it. They also have $70,000 in credit card debt.

• Assessing the performance of their property investments and their impact on retirement planning.
• Exploring options for selling the farm and apartment, and effectively investing the proceeds.
• Understanding the implications of upgrading their family home on their retirement strategy.

1. Debt Management: We prioritized paying off the $70,000 credit card debt immediately, providing an effective return of 18% on the amount eliminated.
2. Property Sales and Debt Repayment: Recommended selling the investment properties, resulting in $3 million in cash after taxes and costs. The proceeds were used to pay off the $1.2 million debt, leaving $1.8 million in cash to upgrade the family home.
3. Superannuation Optimization:
   • Maxed out concessional contributions to superannuation.
   • Made a non-concessional contribution for Georgia (as she was under total super balance limits), while Michael was not eligible.
4. Investment Strategy:
   • Reallocated the investment portfolio towards a more aggressive growth strategy. Increased the risk allocation to growth assets, shifting from a predominantly cash and fixed interest portfolio to a diversified mix of 60% growth assets and 40% conservative assets.
   • Invested term deposit funds in a family trust with a diversified portfolio, maintaining $200,000 in cash for living expenses and discretionary spending.
   • Strategically adjusted the share portfolio by selling underperforming assets and retaining high-performing, low capital gains tax (CGT) assets. Proceeds
     were reinvested into high-quality, diversified funds to mitigate risk and optimize long-term growth.
5. Insurance and Lifestyle Considerations:
   • Ensured that insurance coverage remained appropriate for their needs.
   • Enabled ongoing cash flow for holidays and living expenses.

• Enhanced Liquidity and Investment Growth: By liquidating non-essential assets and adjusting their investment strategy, Georgia and Michael are positioned to achieve a significant liquid investment balance at retirement.
• Optimized Investment Returns: The strategic shift to a diversified portfolio with a 60/40 blend of growth and conservative assets targets a conservative 6% return, balancing growth potential with risk management.
• Debt Freedom: Eliminating high-interest credit card debt and investment property debt enhances financial flexibility and reduces overall interest expenses.
• Future Financial Security: The refined strategy ensures that Georgia and Michael’s investments are well-positioned for growth, with a clear plan for managing their retirement funds and lifestyle aspirations.