Australians have long had a love affair with Self-Managed Superannuation Funds (SMSFs) as the tax office data shows
The Australian Taxation Office (ATO) recently announced that one of its key focus areas for 2016-17 is timely and purposeful engagement with the SMSF sector to co-design and develop practical solutions to key issues as they emerge.
It’s certainly a growing area, with the ATOs most recent SMSF Quarterly Statistics reporting an increase of 29,935 in the total number of SMSFs for the three months to June 30th 2016. In total, there are now an amazing 577,236 SMSFs registered with the ATO, looking after the retirement savings of more than one million Australians (1,087,841).
The retirement savings total almost $600 billion of net assets.
Changes several years ago, allowing self-managed superfunds to borrow and basically leverage their retirement plans has had a mass impact in driving mum and dad investors to take control of their own future.
Let’s take a quick look at a typical scenario. A couple are in their early 30’s they have both been working for over 10 years in their respective jobs. They are likely to have anywhere between $40,000 to $60,000 each in their retail superfunds (eg REST, CBUS etc). With the ability to create a SMSF the couple are firstly able to pull their assets (whilst still being able to maintain their own contribution balances) and then secondly use these funds as a deposit for an investment property. Based on having $100,000 in the newly created fund the couple would be able to purchase a property up to approximately $450,000.
The rent from this property plus the 9.5% employer contributions that every employee gets on top of their wage will usually be enough to fund the loan for this property. All you need to do is sit back and watch the value of the property go up. (shout out to Varo Property who are experts in selecting the right properties for maximum growth)
It must be noted however self-managed superfunds however are not for everyone and your personal situation needs to be looked at independently. They are most suited for people who are looking to have some say in what their retirement looks like rather than leaving it up to the big cats at the retail funds to invest your money for you and hope the share market peaks when you look to retire.
Remember it is never too early to start planning for the future – the last thing you want to do is get to 60 and think I should have done something with my super.
Give us a call to book an appointment to discuss your situation and how exactly an SMSF will work for you.