How to maximise your return on investment in your SMSF
Are you looking for a risk mitigated, high yielding investment property, yield linked to CPI and guaranteed for 20 years?
Where you Invest say $650k to earn an income of $100k* pa, linked to CPI
Whether looking for that extra income to pay down your own home loan or create another $100k in Super
Industry Funds continue to perform poorly, dramatically affecting any compound growth potential for you and thus a far lower end value at the time of you wanting to retire. Long term industry super funds perform at 5% – 7% over the life of your investment. Meaning it will take you around 15 years to double your capital
If you increased it to even 10% average, every 7.2 years your Investment Value would double!
What if you earned 15% pa on the same monies in a risk mitigated investment which is linked to CPI (meaning income increases) and guaranteed for 20 years
Looking for a high yield, risk mitigated investment property in your Super?
Can you imagine the ideal investment with a yield of around 15%, underpinned by a property you own, in which you are doing a massive good turn by housing someone with a disability …. we call this a win-win-win Investment.
The Australian Government have a major looming issue in that there are over 400,000 people with disability who need a place to call home, with most wanting to live as normal a life as possible within our communities.
Our government is unable to provide housing and have thus incentivised investors who kindly put up their hands to secure a SDA dwelling and rent it out to tenants who qualify under the NDIS scheme
For doing so, the government will :
Guarantee your income for 20 years
Link the rental income to CPI
Help us make a difference & accommodate as many humans with disability in purposefully built homes & make a positive impact, when you give someone with a disability the gift of “the of living as normal a life as possible, that includes independence and an ability to thrive.”
Stock Market too volatile to protect your Life Savings in Super?
Industry and Retail Funds Performance not meeting your expectations and requirements?
Wanting consistent yields of 7% to 18% or thereabouts?
Looking to mitigate your investment risk profile?
By answering yes to one of the above or more then you would want to understand how a NDIS Investment Property or SDA Property Investment could be a solution for your SMSF requirements.
When investing in a Special Disability Accommodation Property you are giving your Super choice and an element of much needed control as SDA Property includes several risk mitigation criteria which includes higher than market yields, backed up by the Australian Federal Government for a period of 20 years, where your rental income is linked to CPI having the added advantage of ensuring your yield increases alongside inflation.
Investing in Bricks and Mortar over a 7 – 10 year period is viewed as a lowrisk profile investment. When you have an investment underpinned by Federal Government, as part of the National Disability Insurance Scheme, you could achieve a sense of comfort knowing your investment is primarily de-risked.
Why SDA Property
There is a tragic undersupply, exacerbated by a growing demand for rental accommodation to comply with and meet the needs of a tenant with disability.
With around 400,000 fellow humans in the NDIS and around 28,000 who have made application for independent housing opportunity the government is just unable to meet this growing need.
There are also around 6,000 young people with disability housed in Aged Care facilities who are doing it tough as this just does not suit them. Why be ‘locked up’ in a facility that is designed to house our elderley population just because you are disadvantaged by a disability. For goodness sakes, this is a dire situation and we need to help where we can.
This also means that 6,000 elderly people we love and care for are unable to get into the aged care system because the ‘wrong’ type of person is occupying a much needed bed.
A win-win Investment
By now you may realise that where there is a major (and growing problem), therein lies your investment opportunity.
The Australian Government put in place a significant annual budget to encourage you the investor to put your hand up so that you may become part of the solution in providing a new dwelling in which a person with disability who is approved under the NDIS can become your tenant.
For doing this, your incentive is two fold :
Very high rental yields, above market rates over a 20 year period
A social do excellent, feel great investment by giving someone who is less able than us the opportunity of living as normal a life in and amongst our communities
Your investment includes
Above market yields
Risk Mitigated Investment
Ability to pay off the loan in 7 – 10 years
Creation of an excellent residual income stream for your Super
Peg your income alongside CPI
Making an incredible positive impact on someone less able than we are
“a win/win for Investors with significant social outcomes”
Informed Investment Decision
Read more here on how you can secure a sound investment into bricks and mortar which is risk mitigated, whilst making a positive impact
Residential Property in a Self Managed Super Fund under a lease agreement with tenants paying rent will incur expenses relating to the property which can be claimed and include the following :
Property administration
Insurance (building, contents, public liability)
Advertising for tenants
Property agent’s fees and commission
Some legal expenses
Interest expenses – if the property is part of a limited recourse borrowing arrangement
Rates and taxes
Body corporate fees and charges
Council rates
Water and electricity paid by landlord, but not those paid by the tenant
Land tax
Property maintenance
Cleaning the property
Gardening and lawn mowing
Pest control
Repairs and maintenance but not the cost of improvements
Capital works deductions
Travel expenses to inspect property, not deductible after 1 July 2017
Depreciation
Depreciation of the property can be claimed against contributions made to your SMSF
Talk to your Accountant
What we are sharing with you is of a general nature and your accountant or industry professional will clarify what you are able to claim which will vary according to type of property and tenancy
If you have made improvements or are considering making improvements understand the financial and tax implications and whether or not you are legally able to make the improvements (especially where there are borrowings in the SMSF on this property)
Other types of rental property could include Air B&B, Holiday House, Bed and Breakfast, Vacant Land
Tax Deductions are there for the taking
On speaking with your accountant or industry professional who is able to provide tax advice, take advantage of all claims you have at your disposal so that the tax man and your tenant are helping contribute towards your retirement planning
REMEMBER : Not all property is Investment Grade and very few residential properties lend themselves to being investment grade especially residential property in a SMSF. We understand residential property in Super and can point you in the right direction when it comes to identifying which property and which property strategy would work best for you and your Self Managed Super Fund requirements.
As a trustee of your SMSF; “it is imperative that you get your Investment Decision right at the outset, as this will impact on your return on investment over the next 7 – 10 years or longer!”
The purpose of bringing this to your attention is to make you aware of and cognoscente of the fact that something can be done!
There are always solutions; we only need to understand what that solution might look like which best fits your own situation and circumstances.
New analysis based on figures from the ATO on retirement savings demonstrate that men will have around $154,450 and women only $122,850 in their retirement balances between ages 60 – 64. Not much is it?
Sure you may have more, BUT the question is will it be sufficient to give you the life you want and deserve and for how many years will it last when you are unable to continue to save?
Wow, about 18% of 66 year olds are still working and this figure is likely to continue to grow. Meaning a lot of people have not catered sufficiently for their retirement. And 38% of 66 year olds are retired and living totally off their super and other savings. Difficult to estimate what percentage of these people will run out of money during retirement though.
You may qualify for the state pension, but can you really live the way you want to on this low amount?
You may also have a home which is paid for but costing you more than you are comfortable with in rates, upkeep, garden and home maintenance, electricity, water and more. This could be a drain on your retirement savings thus restricting you from doing what you always dreamed of doing in retirement.
There are solutions, you just have to reach out to us
We could go on and put more fear into you, this is not how we best serve our clients we rather focus on solutions. So if the above presents as a concern for you and you want more at retirement then reach out to us so that we may get a better understanding of where you are now, where you want to be and by when. Having this understanding is important to us and you as it will provide us with probable solutions and solutions that could ‘best fit’ your requirements which in turn will add new value to your retirement destiny.
Solutions are varied and may prove to be a mix of strategies from reviewing your family home, your super, savings plans, shares, properties and more.
The Royal Commission has ignited a lot of talk in the media surrounding Self Managed Super Funds raising more questions than answersWe are not financial planners nor sharing financial planning advice merely quoting sources and or using basic logic in what we are sharing with youWhat we do know is that industry funds (generalised) tend to perform at 5% to 7% per annum over the long term + fees, where in your own SMSF you have a wide choice of investment vehicle and can therefore be more hands on with our own Super destinyNB : It is important to find out what all the fees/costs are being charged to you now wherever your super is being invested. Allows you to compare to what you could be doing and the fees thereThere are investment platforms out there where there are no minimums, but before you set up your own SMSF you need to realise that there are some upfront costs for setting up the SMSF and also a SMSF requires annual audits which also cost moneyWhat this means to you and your super is that once you understand the upfront and the ongoing then work out the minimum you would require in super that not only covers your annual audit / accounting fees but also give you returns in excess of average super funds performanceSet up fees could range between $700 and $2,500 depending on complexity and purpose and annual costs for Admin & Audit from around $665 to $1700 for basic SMSF’s and higher for more complex Self-managed funds and some other minor feesMeaning that the lower the balance the higher the cost as a ratio, thus requiring investments to cover costs and return an ROI you are comfortable withYou will have heard a figure of $200k required by ASIC as a minimum to have your own SMSF, this figure used to be a recommendation and not a legal requirementIf you have an amount you are comfortable with knowing you could achieve the financial return on investment you want then having control and choice over your retirement wealth is imperative to enhancing your retirement goals. This is why there as so many SMSF’s registered with Billions of Dollars under Self Manged Super Funds managementYou may encounter negativity from your financial advisor and the media (it’s their job) however an advisor is obligated to put your interests ahead of theirs or the conglomerate they represent, your own research and due diligence will allow you to come to an informed decisionOnce again : the amount you have in super, the rate of return you are getting versus what your research indicates you could get, less upfront and ongoing fees should help you determine what is the correct strategy and investment vehicle for you and your familyOther aspects for consideration could include : how best to maximise your wealth in retirement planning, what flexibility do you have and want, the varying investment vehicles available to you giving you a wide array of choice and thus control when comparing where the funds are invested now and what choice, control, flexibility, return on investment and ongoing fees If you are unable to do the comparisons and calculations speak to your financial advisor and or your accountant or ask us for a referral to a reputable professional who can assist you so that you can make your very own informed decision of how you want your monies in Super to be working for you
Whilst Planning
Did you know that a major advantage of investing in a property within a SMSF is that you are able to Leverage?What this means to you and other SMSF members is that you can invest only 20% (or more) yet achieve Capital Growth on 100% of the property value + your tenant will help you build wealth by paying rent and depreciation can be deducted against Super contributions further lowering the tax on contributionsThe numbers which are underpinning an investment in property could return you around 10% to 17% per annum – *depending on the type of dwelling, rent, interest rates, deposit, capital growth etc, we can help you estimate the cash flow
Brisbane & Pockets of South East Qld Tipped to be the strongest Property Market in Australia
“Investing in an area with very high and growing demand improves your opportunity for strong rental yields and capital growth potential we all agree”
Identifying these areas and expanding your investment potential into new geographic locations improve the opportunity of creating and securing more wealth, with online inquiry for property in Brisbane and South East Queensland on the increase … meaning astute investors are investing in locations from where they live
Brisbane is tipped to be the strongest property market in Australia in the next five or six years.
Leading real estate industry figure John McGrath described the Brisbane market as undervalued and predicted it would soon start to catch up to southern powerhouses Sydney and Melbourne.
Mr McGrath, the founder of McGrath Real Estate, was speaking in Brisbane at a function on Wednesday and “very, very confident” in where the property market was right now, particularly in Southeast Queensland.
“We think Southeast Queensland, and Brisbane is a focal point, is going to be one of the strongest markets in Australia.”
Click here for full article and watch Adam Di Marco share words of Wisdom here enabling you to come to your own informed decision on where to focus your own research on
Sydney Return on Investment continues to drop, property values exceptionally high & rental yields exceptionally low as a percentage in most sought after locations in Sydney
Investing in Sydney might not make investment sense to you with rental yields fallen way behind the Capital Growth as Sydney peaks in value?
Are you comfortable investing outside of where you live, if so and you merely view the property purely as an investment vehicle – your strategy would be worthy of including Brisbane, South East Queensland or Melbourne in your portfolio. Most of our online inquiries are coming out of Sydney and for QLD property …
Why?
Better value for your Investment Dollar + capital growth potential + Higher Rental Yields mean you get more for your investment in terms of property + yield and thus return on your Investment dollars working hard for you
Did you know : Brisbane needs to accommodate another 1 Million Residents by the year 2031 requiring 30,000 new dwellings per year !
Ignore the Press : Brisbane on the Cusp of a Once-in-a-Generation growth opportunity on the back of massive Infrastructure Investment, new Job creation and a continued strengthening Population Growth where Vacancies are exceptionally low and Rental Yields very strong read blog here
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
