I didn't say you could increase the loan to access the equity as cash, I say you could cross-collateralise a second property to the first, thus accessing your equity that way. This is perfectly legal under super borrowing laws.
How to give a newborn ~100K for their 18th birthday.
- Thread starter moyjos
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I didn't say you could increase the loan to access the equity as cash, I say you could cross-collateralise a second property to the first, thus accessing your equity that way. This is perfectly legal under super borrowing laws.
He has a fair bit already. And being a public servant it should be quite significant by the time he can access it. But we have always taken the veiw that super is just an 'extra', retirement will be funded by other investments / income streams.
Superannuation is preserved until the benificiaries vestment age of 60, or as Mark suggests, 55 under certain circumstances. If people were in a position where they could access super before retirement, even if only for an emergency, then an emergency would come up are regular intervals in life and they'd have nothing left for retirement.
Super is for retirement, not for anything else. That's the whole point of it.
My personal plan for children is to put $10k into super via an aggressive fund at birth. That'll guarantee their retirement no matter what choices they make during life.
From there I'll also put money away into an education bond. This will guarantee their higher education or give them $100k plus by the time they leave school, thus giving them options for life.
I am assusing you have not done this yet as trustees are just starting to use the borrowing rules. I have only seen a coupe come over my desk for 2010. For 2011 funds I am ensure that there will be more.
When you do it, please have a legal option on this and ensure the auditor agrees with this.
I have not had any body doing this yet so have not looked to close on this but on my reading of the standard I would say that by cross-collateraling you are breaching the non recourse provisions. As I read it the bank can only have recourse on the property for which the borrowings where used for. Adding another property would breach this.
The line in bold is what worries about the cross-collaterlise and what I would likely breach the fund on.
67A(1) of SIS Act
(d) the rights of the lender or any other person against the RSF trustee for, in connection with, or as a result of, (whether directly or indirectly) default on:
(i) the borrowing; or
(ii) the sum of the borrowing and charges related to the borrowing;
are limited to rights relating to the acquirable asset;
and
Example: Any right of a person to be indemnified by the RSF trustee because of a personal guarantee given by that person in favour of the lender is limited to rights relating to the acquirable asset.
I have to admit I haven't read the whole thread but I have a question, what's the difference between SMSF and a trust fund?
Apart from the obvious access to retiring at 60 or so.
Apart from the obvious access to retiring at 60 or so.
I'm sure you could work it out. I'm aiming more at $1000 a year per kid myself, plus compounding interest. Compound interest is a magic thing.
Not sure I'd want to give the kid $100k for their 18th though, I'd rather hang onto the money myself and match any of their own savings to help buy a house or something, although my original plan has always been to buy a unit in the city for them to live in when they go to uni. Whether I buy that in my name or let kid #1 claim any grants that are going is just details and is going to depend on a lot of other factors.
.. Or how about making the kid learn about the value of money themselves and save their own money?
A kid I went to school with was given $20k for his 18th birthday and blew it within 3 weeks (didn't even buy a decent car with it!!) all of his family lives off Centrelink and doesn't know the first thing about money management. (before you start at me, no, being on Centrelink doesn't mean you automatically know nothing about money management, but this particular family had no idea and were in the middle of being evicted)
Giving your kid a gift like that is all well and good, but I think they have to deserve and appreciate it, which means to know the value of it before just handing over a huge wad of cash. Each to their own I suppose, but I think if a kid knows about money themselves (and has no idea about the savings account/super whatever) they'll appreciate it much more.
A kid I went to school with was given $20k for his 18th birthday and blew it within 3 weeks (didn't even buy a decent car with it!!) all of his family lives off Centrelink and doesn't know the first thing about money management. (before you start at me, no, being on Centrelink doesn't mean you automatically know nothing about money management, but this particular family had no idea and were in the middle of being evicted)
Giving your kid a gift like that is all well and good, but I think they have to deserve and appreciate it, which means to know the value of it before just handing over a huge wad of cash. Each to their own I suppose, but I think if a kid knows about money themselves (and has no idea about the savings account/super whatever) they'll appreciate it much more.
Mmmm, I'd never give a youngster a big lump of cash for no particular reason. It'll just disappear fast. Now, if its going straight on a house (preferably matching their own deposit), that's another matter.
Speaking of lump sums, I have a relative on Centrelink who just got an inheritance, aka big slab of money. Someone who is almost 60 and never saved a penny. I wonder if it is all spent yet ...
What are the statistics on people who win lotto again? Its the same thing. Give a normal person (ie, not an investor or saver) a big lump of money and its most likely going to vanish.
Speaking of lump sums, I have a relative on Centrelink who just got an inheritance, aka big slab of money. Someone who is almost 60 and never saved a penny. I wonder if it is all spent yet ...
What are the statistics on people who win lotto again? Its the same thing. Give a normal person (ie, not an investor or saver) a big lump of money and its most likely going to vanish.
Really? I'd like to see those statistics, for Aussie kids anyway.
Relfy, I know you and many others on this forum are much smarter than to throw a lump sum at their kid.
My parents did it (only about $3k) and my boyfriend back then when I was teenage and stupid was one of those car nuts. So he kept 'borrowing' money he'd pay back when the car was sold, which of course got sold at a major loss because he spent so much fixing it up. The entire time I lived with him was living hand to mouth, never had any money, was late with the rent, couldn't afford food etc. A lot of the stuff I had brought with me from my parent's place ended up at a pawnbroker.
When I broke up with him I managed to save $12k in 6 months with absolutely no effort (I was still at uni at the time, working part time) and promptly bought a house. No change in any circumstances at all other than - no boyfriend
Needless to say you're never going to catch me giving lump sums to foolish teenagers living away from home
In the past 18 years there has been way too many changes to super.I'd say that on chance ithis co-contribution scheme would be gone very soon maybe in a few weeks!!!
The gov will stop this area - I will tell you that. This government have closed that many loopholes already and they will continue. I'd guessing two-three loop holes will be closed in may budget
The gov will stop this area - I will tell you that. This government have closed that many loopholes already and they will continue. I'd guessing two-three loop holes will be closed in may budget
With one exception, every change to superannuation rules have been in favour of the contributor. The one exception was added due to a nutback lobby group and was repealed quite quickly when the government realised it was a mistake.
The co-contribution scheme was never meant to be permanent. The intention of the scheme was to advantage low income earners who need to boost their super. If eligible, you can choose to take advantage of it while it lasts. It was introduced, the government isn't taking anything away from anyone. It's a bonus within a timeframe, the same way allowing people over a certain age to double their volentary contribution from $25k per annum to $50k per annum is.
100k in super is useless mostly for anyone who has their head screwed on in their late teens to early 20's. You can complain all you like that there's hardly anyone like that, but its a fact.
If only the government would allow you to sign off to access you're super on the proviso that you relinquish any rights to government benefits from that point till death. Mmmm yes.
If only the government would allow you to sign off to access you're super on the proviso that you relinquish any rights to government benefits from that point till death. Mmmm yes.
Hi,
I think it has merit in as much as it gives the kid a huge nest egg in their super account when they start work. If invested in something for 65 years then it does have a chance to grow into a monster retirement bank just through compounding.
I used to run a video game shop, do not give serious money to 18 year olds
I think it has merit in as much as it gives the kid a huge nest egg in their super account when they start work. If invested in something for 65 years then it does have a chance to grow into a monster retirement bank just through compounding.
I used to run a video game shop, do not give serious money to 18 year olds
You'd better take away their right to vote as well, because when those people reached retirement with nothing, they'd be screaming for assistance. They'd have no memory of the bad decision they made 25 years earlier.
That's the unfortunate problem isn't it PT_Bear.
To the OP, it is still achievable with the magic of compound interest as previously mentioned.
IE at birth place $1000 into an online high interest account or even better a managed fund. With a $50 a week contribution ($2600 P/A) at a conservative 7% interest rate it should deliver $97,965.24. in 18 years?
Halve it to $25 per week and its still a respectable $50,672.59.
IE at birth place $1000 into an online high interest account or even better a managed fund. With a $50 a week contribution ($2600 P/A) at a conservative 7% interest rate it should deliver $97,965.24. in 18 years?
Halve it to $25 per week and its still a respectable $50,672.59.
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