Some may even say it's the ultimate life plan as it includes your estate plan and the passing on of wealth to future generations as well as the protection of your family and your wealth.

When I talk about having a back up plan it includes the following key areas.

Your Risk Management Plan - this includes your general and life insurance needs.

Do you have enough insurance cover to replace assets if they are damaged including your home and car and contents?

Do you have enough life insurance in place to cover your income if you are disabled and will your family have enough cover if you die or become disabled?

If you are like the majority of the Australian population the answer is probably not! Cost and confusion can often result in this falling into the too hard pile and people just hoping for the best.

Your Estate Plan - this includes a written will, powers of attorney, health and financial directives and can even include leaving a legacy.

Your Will is the document which provides the directives to your executor and lists how you want your assets to be passed to others. How you own your assets now, and the tax structures they are owned in will effect your estate planning.

A power of attorney provides powers to one or more people to make decisions if you are unable to do so.
This can also work if you are travelling and need to make financial decisions. You can get as detailed as you wish when it comes to this and it can also include health directives based on your wishes if you become sick and unable to act for yourself.

When it comes to legacy planning I often think about the Ben Stiller movie Zoolander.

Do you want to make a difference in the world and establish the "Derek Zoolander Center For Kids Who Can't Read Good And Wanna Learn To Do Other Stuff Good Too?"

You might want to be a little less specific on the title of your foundation but it is possible to create a living legacy now or a legacy as part of your will which could be used to give to a charity or charities which you believe in.

Although the idea of talking death and illness isn't always a nice thought it is important to have the discussion with your professional advisers and I would always suggest you make sure your estate planning professional, accountant, financial planner and insurance advisers are all talking to each other to ensure your wishes are achieved.

To review your back-up plan today contact Money Mechanics.

It is often one of the most misunderstood investment structures, as some people think of this tax shelter as an investment product, so when they see a negative return on their superannuation statement they think that super is too blame.

A negative performance result comes from the financial product that you are invested in, be it cash, fixed interest, property, shares or international shares, superannuation is not to blame.

The confusion comes from the fact that superannuation is the most changed legislation in Australia's history, with at least 151 pieces of legislation making up the superannuation law, it is often put in the too hard pile.

So how much do you need?

Well this depends on your lifestyle costs and the type of lifestyle you want.

First you need to work out how much you need for your spending. If you need $52,000 net per annum as a rule of thumb you will need about one million dollars in asset invested.

If you are going to get an income stream from a defined benefit superannuation scheme such as the CSS or PSS you need to deduct this from your overall living requirement.

Take the net (after tax) income amount and divide this by 0.052, this will give you the lump sum that you will need by retirement to fund your lifestyle. For example $52,000/0.052 = $1,000,000.

Once you have this amount you need to work out the number of years you have until you reach retirement and the rate of return you are getting on your investments in the fund.

This table can be used to work out how much you need to put away into superannuation each year to meet your retirement goals. This table can be used for other investment or savings goals too.

Years to Retirement	4%	6%	8%	10%	12%
5	5.63	5.98	6.30	6.72	7.12
10	12.49	13.97	15.65	17.53	19.65
15	20.82	24.67	29.32	34.95	41.75
20	30.97	38.99	49.42	63.00	80.70
25	43.31	58.16	78.95	108.18	149.33
30	58.33	83.80	122.35	180.18	270.29
35	76.60	118.12	186.10	298.13	483.46
40	98.83	164.05	27 9.78	486.85	859.14

This table was adapted from Barbara Smith & Dr Ed Koken's "Superannuation in a nutshell".

How to use this table: if you have 20 years until retirement and you expect your investments to achieve a 6% annual return you would use the factor of 38.99.

If you need $1,000,000 divide this by 38.99 to give you $25,647 being the amount you would need to put away each year to reach your $1,000,000 target.

There are a number of different tax strategies including salary sacrifice that you can use to achieve your outcomes so it is important to get the numbers done for your specific situation.

Contact Money Mechanics today if you need assistance in calculating your retirement savings goals.

I recall one day where the market dropped a further 2% after its official close due to margin calls causing stocks to be sold down. This resulted in more and more margin calls being triggered the following days and potentially led the market to a lower point than it should have gone.

This strategy of using other people's money to invest can be a great way to enhance your returns however as with anything with the good comes the bad and this strategy also enhances the downside in returns.

How do you make margin lending work for you?

My advice is to stick to your chosen strategy even when it seems hard. I was reviewing a client's portfolio recently and their performance over the last 12 months was positive 9.9% in a time where the share market had done a negative 15.87% return.

I wanted to know what this client had done differently to others to get such a solid result in a bad time in the market. This client had four margin calls during the time (which was a result of the portfolio going down during the correction and their need to provide more equity to the portfolio by paying down the loan).

But what they did during this time was average into the market and buy more stock.

Having the courage to buy when others were selling resulted in this client being able to produce a positive return during this period.

My advice if using a margin lending strategy:

1. Keep a good cash buffer or have access to other funds in case of margin call.

2. Keep your debt to equity ratio at 50% maximum to allow plenty of buffer to market volatility.

3. Have the courage to stick to your chosen strategy and when others are selling look to buy or average into the market.

4. Have a stop loss strategy in place and select a trigger point to take the emotion out of the investment process.

5. Always understand what you are getting into and ask plenty of questions before signing a loan contract.

As the market has shown signs of recovery over the last few months it is a good time to be back in the market to take advantage of the upside.
If you would like to review your wealth creation strategies please contact Money Mechanics today to discuss your needs.

Last month
;

Indices	Closing level	Opening Level	Gain / Loss
All Ords	4250	3948	7.65%

Last 12 months

Indices	Closing level	Opening Level	Gain / Loss
All Ords	4250	5052	-15.87%

Last 24 months

Indices	Closing level	Opening Level	Gain / Loss
All Ords	4250	6187	-31.31%

"if you are not long equities now, you never will be!"

These were the sentiments expressed by the chief sharemarket strategist at Macquarie Bank last week highlighting his move over the past few weeks to go very bullish, particularly on a 3/6 month view. Neil was for sometime negative on the market however since March has seen a number of his key catalysts expressed earlier in the year, turn around positively and is now firmly focussed on the economic recovery and high "beta" stocks. Some of these key catalysts as well as a number of other factors include:

Inventory cycle - new orders building in US as inventory have been depleted massively since Sept when Lehman collapsed and every board made the decision to batten down the hatches in terms of manufacturing.

The earnings revisions ratio has moved above 1x for the first time since Sept 07 as upgrades have outnumbered downgrades, led by the Industrials sector. This is very significant as it has been a major focus since the downturn began (this figure was at 0.3x back in January). It highlights a major shift in the earnings cycle.

Current reporting reason (both here and US) has been better than expected with operating margins (EBITDA/sales revenue) on the improve as companies have been much tighter on cost control. Margins to be the key source of upside risk to earnings forecasts for FY10 and FY11.

Weakest of the major developed countries showing signs of pulling out of their slump, with both Germany and France, the largest Euro area economies, recording positive growth of 0.3% for 2Q09 which was ahead of our expectations, and Consensus estimates. Significantly, the bounce in Germany and France was not driven by inventories, but final demand. The GDP readings suggest the inventory cycle is still to kick in and this will be an important source of support in 2H09. The US industrial production figures give some indication of how strong this boost should be, for example with auto production excluding parts up 40% on the year.

Credit markets have thawed

Chinese leading indicator has recovered very strongly underpinning all commodities

Huge amount of cash on the sidelines (somewhere in the order of more than the SP500 market capitalisation), that will be jittery having not found a home in the recent upswing - expect dips to be pounced on.

Cheap housing finance - Auction clearance rates in Melbourne at 88% - historical highs, buyers fighting for property.

Retail sales rising

Consumer sentiment high

Analyst earnings revision will be large to the upside - expecting current forecast FY11 Industrials growth to double from current 13x forecast

So overall we are now in a position that we are now on the other side of a major global financial crisis, the likes of which arguably we will not see again in our lifetime, and are now presented with an opportunity where being fully invested in equities brings its greatest rewards.

Economic data

A broad range of economic data releases continued suggesting a "V" shaped economic recovery is continuing to develop. At least, this is the growing consensus. Key Australian data releases include very strong consumer sentiment and business confidence data, rising retail sales and continuing low unemployment. Globally, the OECD leading indicators continue to improve while several key manufacturing surveys (US ISM, Euro PMI, Philly Federal Manufacturing survey and the German IFO survey) have risen to their highest levels since the financial crisis began. While this remains the consensus view, we would not be surprised to see further signs that the economy has not turned a corner on a long-term basis.

Looking further down the track

Further down the track, say at the turn of the year, we suggest then it will be time to refocus attention on the evaporation of the benefits emerging from recent stimulus. Much has been done to resurrect the consumer and the housing market, but with it comes a great price in the form of national debt that everyone in the population over the coming two years will be expected to service.

The government is being pressured from various sides on whether maintaining stimulus is the right thing to do given the recent uptick in GDP growth for the economy. Furthermore, Treasury secretary Ken Henry has warned about getting too excited about a global recovery and expects some bumps along the way. Eventually an end to stimulus measures will come, while unemployment and the ongoing capital adequacy of the financial system remain real threats to the economy. This will see Gold and other defensive names return to the fold and reinforces our balanced long term approach.

If you have not reviewed your asset allocation or product strategy recently contact Money Mechanics for a review of your position.

Managing on a Low Income
Wednesday 23rd September at REID CIT Campus
Cost $25
Struggling to make ends meet? Sometimes it can be hard to imagine getting ahead, let alone really getting there. Living on a low income can take a lot of energy and require a lot of skill balancing your budget from day to day. Our habits and attitudes have a lot to do with how we relate to our money and making ends meet. You may or may not already have good money management strategies in place. This course is one of the first simple steps to making the most of your money, from getting a greater grasp on your day to day budget and debt strategies, to your longer term superannuation strategies.

Superannuation Demystified
Look out for 2010's Program at REID CIT Campus
Cost $50
This evening will cover the taxation strategy of superannuation including the taxation on contributions while in the scheme, and on the way out of the scheme. Technical strategies such as advantages and disadvantages of salary sacrifice to superannutaion and defined benefit superannuation schemes in the context of your financial life and estate plans will be covered.