Cash Flow Management and Analysis
Optimising the wealth generation process is about balancing your equity utilisation with cash flow management.
Although cash flow management sounds as though it refers to keeping a budget, it actually has very little to do with budgeting and a lot to do with matching cash flow requirements with strategy affordability. Choosing the right mix of financial strategies is an important part of wealth creation, however, inaccurate cash flow projections can seriously impact your lifestyle and even cause your long-term investment plan to fall like a house of cards.
For more information on cash flow management as a strategy and it impacts personal finances, see Balancing Cash Flow with Investment Affordability.
Good budgeting of course can help you increase your surplus (or investable) income, but multifaceted investment strategies do not have to rely on tightening your belt. Detailed cash flow modelling and scenario analysis can help you choose the optimal mix of financial strategies that will maximise your wealth position, and reduce the risk of failure. In most cases, this can be achieved without increasing your cost of living or changing your lifestyle.
Detailed cash flow scenario analysis can answer questions such as:
- What impact will interest rate rises have on my lifestyle and investment strategies?
- Should I use my surplus income to reduce debt, salary sacrifice into super, or build a share portfolio?
- How much should I spend on an investment property and what LVR should I use?
- Is positive gearing or negative gearing appropriate for my circumstances?
- How does a new investment property compare to an older property?
- What is the true cost of owning a block of land?
- Should I use equity or margin lending to gear into a managed fund portfolio?
- Is it better to pay my insurance premiums with my superannuation fund or personal funds?
- How can I maximise my Centrelink entitlements?
- How much can I afford to draw down each year in retirement?
Generating optimal wealth is a process of balancing equity utilisation with cash flow management. This is an area that Nexus Private specialise in, using comprehensive analysis software, we can help you make decisions that will provide you with the best financial and lifestyle outcomes.
See why portfolio growth improves substantially when coupled with the right financial structure