Case study 1 – tax-effectively re-weight towards cash

Janet is worried about market performance over the next 12 to 24 months. She is also concerned about her job security over this period, and may need to redeem some of her managed investments at short notice if she loses her job. She therefore would like to switch into a cash option.

Janet has been invested in managed funds for several years, and is aware that if she switches to cash she will trigger significant capital gains. However, she is prepared to wear this cost to ensure her peace of mind. She’ll invest again in higher-growth managed funds when her outlook on investment performance is more positive.

Janet speaks to her financial adviser, who recommends that she redeems her managed funds and invests the proceeds in the cash option within WealthFocus Investment Advantage.

Benefits:

• When Janet is ready, she can easily switch from cash into higher-growth investment options offered by the platform.
• If Janet withdraws funds to meet her income requirements, she will not trigger a capital gain until she withdraws more than her initial investment amount including additional investments.
• If Janet chooses to re-weight the portfolio in the future, she will not trigger capital gains.
• Although CGT may still be payable when she eventually redeems her investments in full, she will qualify for the 50% discount provided at least 12 months has passed from when the first dollar was invested.

Case study 2 – tax-effectively manage a regular savings plan

Nicole and Peter have inherited a large sum of money, which they wish to invest in a diversified portfolio, in regular amounts staged over the next two years. With the advice of their financial adviser they invest in the WealthFocus Investment Advantage platform.

Due to unforseen circumstances, Nicole and Peter need to cash out their investment soon after their last regular contribution. Their portfolio has performed strongly, which means they are now facing a significant capital gain.

Benefit:

• Since Nicole and Peter were invested in WealthFocus Investment Advantage and the initial investment was made more than 12 months ago, the entire capital gain is reduced by half. Had they been invested in a regular platform, only the first 12 months’ worth of contributions would qualify as long-gains and be eligible for the 50% discount. Any gains on contributions made within the last 12 months would be 100% assessable as they do not satisfy the minimum 12 month holding rule.

Case study 3 – tax-effectively manage regular withdrawals

Jim and Judy have recently had twins. Their financial adviser recommends they set up an investment plan using WealthFocus Investment Advantage to provide for the twins’ secondary school education in 12 years’ time. Jim and Judy invest $60,000 across three different funds chosen by their adviser from the investment menu.

The adviser actively manages Jim and Judy’s portfolio over the next 18 years, switching funds a number of times as the economy changes and the chosen funds change their characteristics.

Benefits:

• WealthFocus Investment Advantage can offer Jim and Judy a highly diversified portfolio, with access to more than 70 high quality managed funds across a range of investment managers and asset classes.
• On any other platform, Jim and Judy would have to pay CGT when the switches are made, but with WealthFocus Investment Advantage switches do not trigger CGT. Jim and Judy’s portfolio can therefore be updated without it being diminished by a tax payment.
• In the twelfth year, Jim and Judy begin drawing down $10,000 pa for the six years that the twins are in secondary school. They can make partial withdrawals up to the amount originally invested (including additional investments) without triggering CGT. Using any other platform, Jim and Judy would pay CGT when the withdrawals are made.