Call us on
08 8333 2488
Recently I was talking to a farmer about his super fund. He described how several years ago his accountant had recommended that he transfer some of his farming land into super. “I regret doing it” he said. “See how super funds have performed. I have lost a lot of money!” I tried to explain to him that he still owned the same piece of land, albeit in the name of his super fund rather than personally. The fact that mainstream super funds had performed poorly was hardly relevant to him. He, like many others had got caught up in the negative sentiment at the time of the GFC. Investment markets were on the nose and super fund returns were in the spot light. He, like many others was confused about how superannuation works. Most super funds now have a wide range of investment choices. These can cater for conservative investors (cash or term deposit options) right through to more aggressive investors (shares and geared funds). Too often, I see people with their funds invested in the ‘default’ option, which is then never reviewed. Peoples’ tolerance to risk generally does change as they get older. Accordingly, investments should be reviewed regularly and should move in line with their risk tolerance. You may borrow to buy an investment property when you are in your 30s, but would you do it in your 60s? Perhaps not. Super is no different. The default ‘Balanced’ option may be too conservative in your 20s and 30s but may be too risky in your 60s. Alternatively, as my farmer client had found, a self managed super fund provided him with the opportunity to invest in assets that he was familiar with and understood, his own farm land. When was the last time you reviewed your super investment choices? Super retains its position as the most effective place for your retirement funds to be placed. Tax and Centrelink concessions can be significant, and can more than offset investment market fluctuations. A decision as to how superannuation can help you save for retirement should have nothing to do with investment markets. As always, in relation to financial matters, seek professional advice. Don’t just do something because a family member or your mate at the BBQ thinks it’s a good idea! Scott Keeley
There’s only a few months to go before 30 June and now is the ideal time for those managing Self-managed Super Funds (SMSF) to review their financial position and start planning for the new year. We suggest you consider your year-end planning strategies now. Call Wakefield Partners to make an appointment to review your fund. 1. Be aware of what your super fund can claim as a deduction. This may include ongoing portfolio management, accounting and administration fees. Insurance premiums purchased through your SMSF. This highlights one of the benefits of having your Personal Insurance purchased through your SMSF. This is in contrast to purchasing insurance directly where the you are the policy owner. Personal Insurance premiums other than Income Protection Insurance are not generally deductible to the individual. We can advise you on the appropriate cover for yourself and the other members of your SMSF. 2. Review Your Investment Strategy Is your SMSF in line with its investment strategy? Do you have a written strategy? With the recovery seen in investment markets over the last 12 months you may need to review your asset allocation. We can provide a strategy that will make your auditor smile! 3. Are you drawing a pension from your SMSF? We suggest you start thinking about your income levels for 2010/11 now. Does your SMSF you have sufficient liquidity to cover pension liabilities? Keep in mind the government has not announced any continuation of the “Minimum Pension Relief for Self-Funded Retirees”, and as it stands now it will return to the “normal” minimum levels from 1 July 2010. For example for a person aged between 55 and 64, the Minimum Pension Drawdown will return to 4% per annum up from the current 2%. 4. Reporting Existing SMSFs are required to have their tax returns lodged with the ATO by a registered tax agent by mid-May. Is your SMSF on target to meet this deadline? *An existing fund is a fund commenced prior to 1 July 2009 and has lodged previous returns. Do you have any concerns or questions regarding your SMSF? Then call in to have a talk with us. Normal 0 false false false EN-AU X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-fareast-language:EN-US;}
Last week I was chatting to a client who is a recent convert to self managed super. Mid way through our conversation he laughed and said to me; "You know, every time I see those Industry Super ads on the TV I feel sorry for the poor members. I don't have to waste my money advertising my fund!" It was a different slant, but unfortunately very true. Recent APRA statistics illustrate the astounding growth in SMSFs to the point where they now account for over 31% of total assets in superannuation. This has largely been achieved by "average" people electing to set up self managed super funds, rather than as a result of advertising campaigns or compulsion. There is serious money in SMSFs. Total assets are more than $386 billion with an average fund balance of $919,000. With around 1,630 being set up each month the growth is set to continue. For those who do not have a SMSF, the key takeaway is that now they are very mainstream, "common garden" in fact. A wide range of people have come to appreciate the benefits of self managed super, namely control and transparency. Also, when things become popular, competition invariably forces costs down and that is what we have seen with SMSFs. If you are looking for more information on SMSFs go to Self Managed Super. Better still, talk to us. We have many clients who enjoy the benefits of self managed super and our advisers can provide the right advice to get you started.