Why set up your own Self Managed Super Fund?
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Industry funds dismal long term (lack of) Performance :
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Industry Funds results from 1996 to 2010 :
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- corporate funds on average provided returns of 5.84% pa
- industry funds 5.35% pa
- the public sector funds 6.30% pa
- and retail funds 3.66% pa
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And … more than 150 of the growth funds tracked by Morningstar have not earned more than 3.5 per cent a year — or 1 per cent above inflation — over the past decade. These funds contain about $16 billion of workers’ retirement savings.
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Thirty-three funds have delivered average investment returns of 5 per cent or more for the past 10 years, including some of the biggest funds.
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“Ask yourself how does this help you create sufficient retirement income on your super contributions?”
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It is widely known that Industry Super Funds attract ongoing annual fees which are further eating into your own retirement value. What most investors don’t consider is that you pay your Fund Managers every year even in years where your fund goes into negative performance. You are paying for this privilege – why??
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In your industry fund, not only are you achieving dismal long term performance results on your own retirement funds but if you have $125,000 in your current super, ONLY this $125k is working for you!
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Wouldn’t you prefer to take advantage of the power of Leverage; whereby you invest say only 20% of the value of the property and have the bank and a tenant fund 80% of the investment meaning you now have an Asset of over $500,000 working for you in your own SMSF and you only invested around $100k for the privilege
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Compounding Returns on Investment
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Compounding Returns comprise of Interest being earned on top of Interest for the life of the investment; the longer one invests this higher a compounded return will be … we agree
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Based on the above returns of 5% pa, $100,00 invested in your Industry Super account would have grown to $1.54m in 15 years (excluding Industry Super annual fees for this exercise) but if the return was 10% per cent pa, the balance would only be $.51m over this same period
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What this means to you is that being in control of your own Super Destiny you could be better off by over $900,000 this time in your own pocket!
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“This is serious stuff you would agree!”
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What if you set up a SMSF (Self Managed Super Fund) and secured a prudent investment property which generated a return on investment of 10% pa; can you imagine the returns on your investment at a regular 10% pa versus industry averages of a dismal 5% pa?!? Could equate to over a Million $’s over 15 years more in your own pocket
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How will a 10% compounded over 10 years or more positively effect your retirement lifestyle. What will this mean to you?
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*This is not rocket science nor financial planning advice; merely using Logic and industry statistics