Mark is 28 and has worked full time since he was 21. His employer super contributions have accumulated to just over $70,000. He has no plans to increase his super contributions until after he has bought property.
Given the relatively low fund balance, a SMSF may eat up funds in fees. Mark decides to think about a SMSF in the next 10 years.
Mark meets Dina. Mark (32) has accumulated $80,000 in super and Dina (30) has $60,000. Together they could combine their super and rollover $140,000 into a SMSF.
Mark and Dina work with a SMSF provider to set up their SMSF and take care of ongoing administration. Based on advice from their qualified SMSF specialist adviser, they decide to invest $40,000 in the share market and borrow another $40,000 from the fund – investing a total of $80,000 in shares. The remaining $100,000 of assets can be invested into a diversified range of investments such as international shares, listed property, cash, term deposits and other investments.
The interest on the borrowed $40,000 borrowed is tax deductible to their SMSF. The dividends from the $80,000 investment (based on 4.5% fully franked) more than covers the interest on the amount borrowed ($40,000).
This conservative approach to borrowing to invest into the share market is popular for younger couples who can’t touch their money for another 25 years. It’s a great way to grow their super.
Mary and Peter are small business owners in their late 40s. They’ve maximised their super contributions over the years and have a joint balance of $1.2 million in their SMSF.
They make plans to expand their business and consider buying a business premises instead of leasing. After consulting with their financial adviser and accountant, they buy the property outright through their SMSF. They’re building their retirement savings in a tax effective way and reaping benefits by leasing the property from their superannuation fund. Their business is operating out of the premises owned by their SMSF and paying rent to their SMSF. This is a tax effective strategy that will grow their wealth – and importantly – protect their wealth.
Mary and Peter work with a qualified SMSF specialist adviser to stay across their trustee responsibilities and keep planning for their business future and retirement.
From setting up your fund to simple administration, compliance, auditing and tax return preparation, we’re in your corner. Hundreds of fund holders already trust us to take charge of their SMSFs, and we’re the independent administrator of choice for accountants and financial planners across Australia.
Horizon Superannuation Administration Services is not a financial planning business. It does not have a Licence to provide advice. It does not have any products.The contents of this website are of general nature only and have not been prepared to take into account any particular trustee/member objectives. When you are considering any information on our website, if you are the trustee or prospective trustee of an SMSF, then ‘you’ and ‘your’ means the trustee(s) of the SMSF. As a trustee, you are ultimately responsible for your SMSF, including any investment decisions that you make for your SMSF. Should you require assistance we recommend you seek a licenced financial adviser. Whilst we believe all sources for the content on this website is considered reliable, responsibility is not accepted for any inaccuracies, errors or omissions. Horizon Superannuation Administration Services can accept no liability for any decisions that you may make based on the information on this website.