In times of complex investment offerings and high personal debt, find out how PGD clients Bob and Julie Hogan have taken a simple and sensible approach to money – and ended up exactly where they want to be.
They represent a generation that worked hard and lived within their means – avoiding high levels of debt and putting money away for the future. It’s an old fashioned approach, but one that has served them well.
We’re the type of people that – if we didn’t have the money for it, we didn’t buy it. We didn’t like accumulating debt, and were fairly disciplined. We worked hard and were good savers – we had a social life, but weren’t party animals, and for holidays we liked to get away in the van.
Their sensible attitude to money saw the couple enjoy a modest but comfortable lifestyle, while paying off an investment property through the Defence Housing Association (DHA) fund.
But when Bob had the opportunity to take an early retirement from the Australian Post Office after 30 years’ service, he was keen to take the opportunity to change his lifestyle.
Seeking Financial Advice
Bob says he was very interested in the prospect of retiring young (at 57). But, he was worried that his investments and savings might not be enough to sustain the pair through a longer than usual retirement.
I knew that our investment property and super put us in a reasonably sound position – but I wanted to be sure that I was in a position to retire. I didn’t want to take that step then find out a few years on that we couldn’t actually afford it.
Also, I wasn’t overly impressed with the super scheme I was in, in terms of the pensions and scope of investment strategies. I looked into SMSFs, but it became clear that with government requirements, I needed to get hold of a good accountant and an independent financial adviser.
That’s when Bob was referred to Godfrey Pembroke adviser Harry Mantzouratos, CEO and Principal of PGD Financial Services. While he was keen to get advice, Bob says he wasn’t really sure what to expect.
We didn’t have a clear picture – but we were definitely open for advice. The only thing clear at that particular time was that we’re not big risk takers, but were good savers and good planners. We wanted to work to achieve what we can within our means.
While Bob and Julie agreed they needed financial advice, they were still a little apprehensive.
When you look at an environment where you are seeking advice from someone you don’t know, you’re not sure of the process and wondering if you’re going to get conned! I didn’t want us to have to take risks outside our comfort zone to achieve retirement. We’ve worked hard, so it would be silly to throw that away on an investment strategy we weren’t comfortable with.
Their caution meant that when they first met with Harry, they were very clear about their personal risk tolerance.
After the first meeting, we left Harry on no uncertain terms that we were conservative investors, that we didn’t want to try to make a million bucks and then lose it all.
Harry agrees that in the beginning he needed to earn Bob and Julie’s trust, by being open and clear about the reasons for his advice.
When I first started seeing Bob and Julie it was 2008 – right in the midst of the Global Financial Crisis. So they really wanted transparency and education around what I was recommending – basically what we were doing and why. They were the sort of people looking for good advice – and who were prepared to take it. But it was important for me to provide proof points around the value of the advice, and how it matched their investment goals.
Creating the plan
Harry helped the couple set up an SMSF, so they could sell their existing DHA property and deposit the money into superannuation.
Because they had had a good experience with it in the past, they wanted to purchase another DHA property through the fund, and get the benefits of less complexity and tax by having it in super.
He then helped them determine an investment strategy, based on quality managed funds and stocks they trusted, to provide an additional income stream. He says that Bob and Julie’s conservative approach meant each investment was considered carefully, based on its potential risk and contribution to the strategy.
We talked about taking calculated risks to help generate more income – if you’re happy to have your money in a bank, or borrow from them – how would you feel about owning the shares?
By choosing investments with the right risk and income profile, Harry built a strategy where Bob and Julie were getting two regular income streams – one from the investments and one from the rental income. He says that while Bob and Julie may be conservative investors, the strategy still factors in room for growth.
We set up the investments strategy so that there was the potential that 10 years into retirement, Bob and Julie could potentially have more money than they did at the start. But we did it in a way that planned for spending and a bit of bad luck – like another GFC. There will probably be two, three or four market crashes in this part of their lifecycle, so it’s important to factor that into the plan.
A stress-free retirement
Almost 10 years later, Bob and Julie are living their dream, with 14.5 acres on the mid-North Coast of NSW, two horses “with attitude,” and a lot of machinery Bob enjoys looking after. Julie spends her time pursuing her hobbies of sewing and craft, and they still regularly get away on holidays in the van. Bob says that the advice process has been an extremely positive one for them.
We’ve been very comfortable with the advice, as we both honed in on the same end result: financial longevity and a stress free retirement environment.
Harry came up with a plan that met those requirements and then some – and we’ve never looked back. We’ve never had any reason to challenge it or change it, and we haven’t needed for our pensions to be increased. We’ve done everything we wanted to be able to do, financially, so that tells us both that we’re on a winner.
Bob says that it’s impossible to put price on a lifestyle where worrying about money isn’t a factor.
When you’re retired you don’t need sleepless nights worrying about financial things – so we can wake up and enjoy life. When I was working, the stress that people put on you – you always look forward to the weekend so you can wind back and enjoy life. Now, every day is a weekend! As for Harry’s involvement in the process, setting up the plan and fine tuning it as we went on – you can’t underestimate or understate that.