A $2.3 million portfolio: How advisers Jamie & Drew manage a retirement

Drew Meredith and Jamie Nemtsas, certified financial planners from Wattle Partners, join Owen Rask on The Australian Investors Podcast to walk us through how they would manage the $2.3 million retirement portfolio of a fictitious couple, Fiona and Craig.

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Drew Meredith and Jamie Nemtsas, certified financial planners from Wattle Partners, join Owen Rask on The Australian Investors Podcast to walk us through how they would manage the $2.3 million retirement portfolio of a fictitious couple, Fiona and Craig.

This episode is filled with great insights around portfolio construction, investment planning, investment property, retirement strategy, risk profiling, lifestyle goal setting, investment returns and more.

The hypothetical couple: Craig & Fiona

  • The fictitious couple Jamie and Drew are working with are:
    • Craig (62). Earning $125,000 per year as an mechanical engineer, PAYG.
      • Super: Craig has $850,000 in super, currently maximising his SG. He has a balanced strategy and pays $5,500 in insurance inside super. Super has returned 6.6% over the past 10 years.
    • Fiona (55). A Business Development Manager for a technology company, earning $110,000, plus $10,000 in bonuses, PAYG.
      • Super: She has $670,000 in super. She has a balanced strategy and pays $3,500 in insurance inside super. Super has returned 5.4% over the past 10 years.

Their current situation:

  • They have $100,000 left on their mortgage and the house is worth $880,000.
  • Have two adult-age children, who are self-sufficient.
  • Both believe they are high-risk investors, but Craig is more conservative and keen to replace his income with defensive positions (as much as possible).
  • Fees on their super funds are estimated at 1.2% per year.
  • They have $450,000 in managed funds and shares.
  • They have $300,000 in cash.
  • They estimate they need $80,000 to live comfortably.
  • Craig’s super insurance covers him for $190,000 (life & TPD) and his income protection is only $4,000 per month.
  • Fiona’s super insurance covers her for $260,000 (life & TPD) and her income protection is only $3,000 per month.

Craig & Fiona’s goals:

  • Both of them and want to get advice on these things (specifically): plan to retire in 3-5 years
    • They want to be debt-free before retirement. Should they use their cash for this?
    • Craig is thinking of buying an investment property for yield, just before retirement.
    • Need to build an investment portfolio capable of helping them live sustainably, but don’t know if their super fees and strategy are right.
    • Want to have cash to feel secure, so they want to maintain a decent buffer.
    • They’d rather be ‘hands off’ investors and leave it to the experts (funds, ETFs, etc.).
    • Don’t need to leave anything to the kids.

Here are the questions Drew & Jamie need to answer

  • How does the financial planning process work at Wattle Partners?
  • When you meet with Fiona & Craig, what are 3-5 questions you would ask first?
  • Insurance:
    • What are some factors Craig & Fiona need to consider? (assume they have no material prior medical conditions)
    • Should they drop their insurance?
  • Investment property:
    • Is Craig ok to think of residential property as a source of good yield?
    • What would be an alternative?
  • Investing:
    • What goes into a risk profile? (generally)
    • What are some simple super strategies they could consider to boost their balance? (co-contribution, super guarantee limits, NCCs, etc.)
    • Should they put their super on a platform or go with an SMSF?
    • Should they build a portfolio outside super?
      • ETFs or funds?
      • What would be the mix (SAA) or risk-on to risk-off at Wattle for a higher risk investor?
      • What are some examples of funds or strategies in each ‘bucket’?
  • What should they do with their cash versus mortgage goal?
  • Would you consider ESG as part of their investment process?
  • What are some of the risks you’ve identified in their situation (goals, risk profile, conflicting strategies, etc.)?

Watch the video version on the Rask Australia YouTube page.

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