How I got from just a PPOR to multi millionaire retiree in 5 years using only OPM.

[Trogdor]

I have sporadically been placing 25k into super over the past few years but because of the poor performance of first state super, I have been discouraged to continue as I feel that I could do better with investing the 25k myself even without tax concession.

Have you had any experience with a sMsF group called

www.esuperfund.com.au

Its meant to be DIY, online and has lower fees than traditional smsf providers.

We use superconcepts but there are a few low cost providers out there like the one you mention, superconcepts, few othe. Cheap and not too stressful.

If you feel like you could do better yourself set up a smsf, bank the tax benefit and invest the money as you see fit!! Its easy.

 

[astr0]

ouch thats nasty, unfortunately the stock market carries a high risk, and really isnt a serious investment tool. if you consider the few percentage points extra return you get long term from shares over say bonds, is it really worth risking losing 1/2 your investment?

You're kidding right?

All investment classes carry risks, and property is no different. There are many horror stories from the property market too.

Do your own research but based on today's prices I would be more comfortable investing in the share market if I had to choose between shares and property as of 2nd January 2013

 

[astr0]

I think you overestimate the power of superannuation. In theory it sounds great to put money in there because it will compound over time with less tax etc. However, as we have seen recently, superannuation is the great big kitty for governments to tap into when their budgets are in trouble. Too much regulatory risk, especially 30-40 years out, and you can guarantee that in the next few decades we will get taxed more in this vehicle as more Australians get older and their super balances get bigger. Would rather the cash in my own pocket to invest because you are not so vulnerable to legislative changes.

Government's these days are moving towards a model where they promote self-funding retirements, rather than people relying on government handouts to fund their retirements. This is evident in the increase in the SGC to 12%.

Therefore whilst there is legislative risk, this applies to all investment vehicles and super is a very good investment structure and up there with the best depending on your circumstances.

 

[astr0]

At present I have 100k in super. If I was to withdraw that for smsf and make 450k non-concessional super contributions over the next three years, that would mean about 550k in super and then would it be worthwhile to use the smsf to borrow and buy a commercial IP for about 1 mil which I would occupy? Does this sound reasonable or best to buy index funds with sMsF?

You might be breaking a few Sole Purpose Tests by occupying the property held through your SMSF. Which would equate to 46.5% tax on your super and contributions.

 

[redwing]

You might be breaking a few Sole Purpose Tests by occupying the property held through your SMSF. Which would equate to 46.5% tax on your super and contributions.

You sure about that, I thought this was normal?

 

[Rixter]

You sure about that, I thought this was normal?

ATO's Sole Purpose Test

Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds. This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement.

If you or any party directly or indirectly obtain a financial benefit when making investment decisions and arrangements (other than increasing the return to your fund), it's likely your fund will not meet the sole purpose test. When investing in collectables such as art or wine, you need to make sure that SMSF members don't have use of, or access to, the assets of the SMSF. The most common breaches of the sole purpose test are:

investments that offer a pre-retirement benefit to a member or associate
providing financial help or a pre-retirement benefit to someone, to the financial detriment of your fund.

 

[astr0]

You sure about that, I thought this was normal?

Purchasing a property through SMSF and occupying it ain't a good idea, unless it's business real property.

Probably need more details to make a better determination

 

[Rixter]

Purchasing a property through SMSF and occupying it ain't a good idea, unless it's business real property.

Probably need more details to make a better determination

Only if they are business real or commercial properties. No residential investment properties currently owned by a member or related party may be transferred into an SMSF. Residential investment properties may not be rented to a member or related party either.

 

[redwing]

Purchasing a property through SMSF and occupying it ain't a good idea, unless it's business real property.

Probably need more details to make a better determination

See bold section from original post

Originally Posted by china
At present I have 100k in super. If I was to withdraw that for smsf and make 450k non-concessional super contributions over the next three years, that would mean about 550k in super and then would it be worthwhile to use the smsf to borrow and buy a commercial IP for about 1 mil which I would occupy? Does this sound reasonable or best to buy index funds with sMsF?

 

[astr0]

See bold section from original post

Sorry mate, missed that important point

 

[LoneWolf]

Top stuff!!

Now... I need to get my head around how to LOE.
Starting from learning how to play shares

 

[Orks]

Just read this thread from top to bottom for the first time. I seem to be missing something though. I'm not sure where all the praise and adulation for Keith is coming from. Most of his success seems to come down to simple timing. He bought some property before the property boom which went up. He then borrowed against that and bought shares before the stockmarket boom which went up. Then they went down during the sharemarket crash.

He only makes $40k net income after interest from his investments (when the thread was initially posted, I assume it's more now though).

I don't want to come across as bagging the guy, but he doesn't seem to have done anything all that ingenious or insightful, just rode the markets over the last decade and setup a trust structure like hundreds of thousands of others before him.

Just out of interest, where do you live Keith, and in what sort of house?

 

[Rixter]

I don't want to come across as bagging the guy, but he doesn't seem to have done anything all that ingenious or insightful, just rode the markets over the last decade and setup a trust structure like hundreds of thousands of others before him.

Just out of interest, where do you live Keith, and in what sort of house?

Yep thats it Orks..making money and attaining financial freedom from investing is simple but it's not easy. The process is not complicated its just people who tend to complicate it.

Anyway from your perspective, what have you done in the investment world?

Are you financially independent?

If so. what is your annual passive income?

And can you educate us all on the strategy's you've used and over what time period?

Where do you live?

What sort of house do you live in?

Do you own it or paying it off?

Thanks in advance for your insights on where you are on the investments ladder and hopefully sharing with us your chosen strategy's.

 

[skater]

I'm not sure where all the praise and adulation for Keith is coming from. ..............He only makes $40k net income after interest from his investments

That's right! It's so easy to become a multi millionaire and have an income, indexed to inflation, that is enough to live on.

I'm sure you've done much better Orks. Why not share your story?

 

[Orks]

That's right! It's so easy to become a multi millionaire and have an income, indexed to inflation, that is enough to live on.

I'm sure you've done much better Orks. Why not share your story?

I'd rather not, then you'd all copy me and reduce the value of my business!

Also, I never said what Keith has done was easy, just that he was mainly the beneficiary of timing by owning property and shares before they both boomed.

 

[geoffw]

I'd rather not, then you'd all copy me and reduce the value of my business!

Also, I never said what Keith has done was easy, just that he was mainly the beneficiary of timing by owning property and shares before they both boomed.

It's quite easy with hindsight to say things like that.

But at the time it was not at all obvious. Even as far back a 2003 there were people saying that the property bull run had ended, and that it was time to get out or property. They were out by four years.

To be able to get such good timing for shares as well as property indicates much more than just luck. There was the skill of getting in when he did, and the perseverance of sticking to a plan when many were saying it wasn't possible.

 

[skater]

I'd rather not, then you'd all copy me and reduce the value of my business!

Don't flatter yourself! There are many very successful people here that are way too busy doing their own thing to want to copy others.

 

[Rixter]

I'd rather not, then you'd all copy me and reduce the value of my business!

Orks, the formula for success in what ever path you so choose = 80% mindset x 20% strategy.

In other words how you think is four times more important than how you intend to doing it!

With this in mind I dont hold much confidence in your business succeeding with your current scarcity mindset.

Abundance thinking is the name of the game if you're planning on business longevity.

Some food for thought. I hope it helps.

 

[MTR]

Just read this thread from top to bottom for the first time. I seem to be missing something though. I'm not sure where all the praise and adulation for Keith is coming from. Most of his success seems to come down to simple timing. He bought some property before the property boom which went up. He then borrowed against that and bought shares before the stockmarket boom which went up. Then they went down during the sharemarket crash.

He only makes $40k net income after interest from his investments (when the thread was initially posted, I assume it's more now though).

I don't want to come across as bagging the guy, but he doesn't seem to have done anything all that ingenious or insightful, just rode the markets over the last decade and setup a trust structure like hundreds of thousands of others before him.

Just out of interest, where do you live Keith, and in what sort of house?

Hi Orks
I think what Keith has achieved is bloody brilliant.

Its one thing to recognise rising markets but then it takes courage to jump in and take action.




Cheers
MTR

 

[DaveM]

That's right! It's so easy to become a multi millionaire and have an income, indexed to inflation, that is enough to live on. :rolleyes

Its quite easy skater, my Amway brochure shows me that I will be living in a mansion with a 18 foot cruiser and a maserati from my passive income within months!