Overview
The purpose of this tool is to enable advisers to demonstrate the long-term benefits of contributing and investing surplus funds into a concessional tax environment as compared to investing them outside of the superannuation system. This tool, originally used for super compounding exclusively has evolved into an all-purpose scenario tool.
*The tool isn’t attempting to present an accurate projection of the endpoint that may be attained, but to demonstrate a broad point of the benefits of compounding. It does not take into account all the circumstances of your client and so should be accompanied with an appropriate disclaimer when providing to a client.
Variables & Input Fields
How do I use it?
Variables & Input Fields
1. Annual Contribution
This represents the extra contributions made each year over the lifetime of the client.
2. CPI
This is the expected average Consumer Price Index.
3. ROI
This is the expected average Return on Investment.
4. Comparison Tax Rate
This is the tax rate which diminishes the available funds to invest post contribution.
5. Marginal Tax Rate
This is the average marginal rate of tax depending on each individual client’s circumstance.
6. Years To Compare
This is the time frame for the projection – obviously the longer the better for compounding to work its magic.
7. Graph
Demonstrates the results of the tool via a graph.
8. Tax at Comparison Rate
Represents the total tax you'd pay in comparison to the marginal rate – this is set at the users discretion.
9. Tax at Marginal Rate
Represents the total tax you'd pay if the funds were invested elsewhere – this is set by the marginal tax rate.
10. Tax Savings
This shows the total savings if the funds were contributed in super – calculated by the tax at a marginal rate less the tax on superannuation.
11. Balance at Comparison Rate
This represents the total funds that you'd have in super at the end – based on the number of years, annual contribution, CPI, RIO and tax rate.
12. Balance at Marginal Rate
This represents the total funds that you'd have if the money was left outside super.
13. Improved Position
Shows the overall position by comparing the superannuation balance and balance outside superannuation.
How do I use it?
The idea is that you sit in front of your client so you can demonstrate and explain the concepts behind what you’re demonstrating to them.
Work through each variable inviting the client to participate in setting the various figures leading them with explanations as required.
The graph and corresponding figures in Your Results explain the broad tax savings to be had over time and how much further ahead the client could be should they start making contributions now.
Once you have demonstrated the benefits of getting money into super, this leads to a discussion that can be facilitated via the simple retirement calculator.
You have to save your instance before you can print it.
Related Links
This support article covers all the menus and shared elements used throughout AccountKit
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