Put $$ Into Super. 3yrs ago Govt Promotion

[Gee Cee]

Anyone remember the big advertising promotion a few years ago by Govt. Put your money into Super by a certain date for some sort of benefit. Cannot remember much of it just sat with property.

Adds around with Lear Jets & Porches For Sale. With captions like "Must Sell Putting $$ into Super"

Lot of people sold properties etc to put $ into super.

Just wondering how they would be faring after the recent turmoil in markets

Gee Cee

Greg

 

[marg4000]

"Superannuation" is a broad category that covers many investment options. Investment options are chosen with the individual risk profile in mind, and can be as conservative or speculative as one chooses.

Yes, we put money into "super", and as we are close to retirement chose mostly conservative options.

We are happy with our decisions.
Marg

 

[Stinktier]

they would be going pretty badly i would imagine as the cut-off was 30june. That was just before the market was starting to hit its peak (around november).

But their situation would be no different to someone that has a high LVR now as they will end up pretty much the same way.

Pay off debt name of the game at the moment IMO.

 

[BayView]

Anyone remember the big advertising promotion a few years ago by Govt. Put your money into Super by a certain date for some sort of benefit. Cannot remember much of it just sat with property.

Adds around with Lear Jets & Porches For Sale. With captions like "Must Sell Putting $$ into Super"

Lot of people sold properties etc to put $ into super.

Just wondering how they would be faring after the recent turmoil in markets

Gee Cee

Greg

Didn't follow their advice.

Couldn't see the benefit of selling our portfolio, paying a swag of cap gains tax and selling costs, just to put it into super because the benefits had suddenly improved a bit.

It would take several years to make up the loss just from that alone, not to mention the recent performances of super.

The "best" performer last year was -1.4% apparently.

 

[nonrecourse]

Didn't follow their advice.

Couldn't see the benefit of selling our portfolio, paying a swag of cap gains tax and selling costs, just to put it into super because the benefits had suddenly improved a bit.

It would take several years to make up the loss just from that alone, not to mention the recent performances of super.

The "best" performer last year was -1.4% apparently.

Like you Bayview we saw no sense in selling our properties that we held outside of super to sell up and give the government some of our money

Our two business properties held in units in a unit trust in super have increased in value at a rate of 53.4% per annum for 14 years. There has never been a year that our super lost money or didn't have to pay tax We would have purchased more property in super but in 1998 Costello closed off the Trevisan unit trust loophole. Just before his party lost office last year he brought in property warrants which if used correctly are another license to print money with one refrain;

Governments give and goverments take it away, you need to hedge your bets. Over the next ten years of hard times that pot of gold will start to look too attractive not to tax.

 

[The Y-man]

Lot of people sold properties etc to put $ into super.

I doubt a lot of people the ads were aimed at had properties to sell..... it was aimed at middle class/age Australia, with big CC bills and flash cars etc, that were going to be a serious burden on the welfare system when they got to retirement.

Cheers,

The Y-man

 

[Pushka]

Our SMSF last year had a 2% profit! Yay! Way better than the fund managers. Since July 1, down down down. But am hoping we are still ahead of the big Super funds.
Pity those people who took out LOANS to put that $1million into super. Yikes!

 

[Apocalypse]

Our two business properties held in units in a unit trust in super have increased in value at a rate of 53.4% per annum for 14 years.

Really? So they are now worth 300 times what they were 14 years ago? Not 300% - 300 TIMES!

 

[nonrecourse]

Really? So they are now worth 300 times what they were 14 years ago? Not 300% - 300 TIMES!

Sorry I wasn't suggesting the properties increased that much it was our original seed capital that went into the properties that grew 53.4 percent per annum

 

[redwing]

Sorry I wasn't suggesting the properties increased that much it was our original seed capital that went into the properties that grew 53.4 percent per annum

Even at that, it's still an outstanding achievement

Re: The Super contributions, a couple I know who sold up some property and put the money into super were down about $500k a couple of months ago......now

Another semi-retiree is down over 30% on a very substantial portfolio, dividends are still paying up and he has ability to do more casual work though

And yet another, was going to put a swag of money into shares and managed funds on his accountants advice, with the accounting firm managing the whole shebang, on the day he was to sign up to the deal he observed two of the firms members going out to purchase a commercial IP, so changed his mind re shares and man funds and is still very much pro-property and looking for distressed sellers, areas of rezoning and with potential of higher use etc

Through all this turmoil there has certainly been some lessons within for me...I better write em down for when I get to retirement age

 

[nonrecourse]

Make your super your business and watch it grow

Even at that, it's still an outstanding achievement

Re: The Super contributions, a couple I know who sold up some property and put the money into super were down about $500k a couple of months ago......now

Another semi-retiree is down over 30% on a very substantial portfolio, dividends are still paying up and he has ability to do more casual work though

And yet another, was going to put a swag of money into shares and managed funds on his accountants advice, with the accounting firm managing the whole shebang, on the day he was to sign up to the deal he observed two of the firms members going out to purchase a commercial IP, so changed his mind re shares and man funds and is still very much pro-property and looking for distressed sellers, areas of rezoning and with potential of higher use etc

Through all this turmoil there has certainly been some lessons within for me...I better write em down for when I get to retirement age

Hi redwing;
We still believe in starting by having three investment pillars and looking ahead to where we wanted to be was the key to our success. Most SS investors do not do this which later on if you do acquire a lot of assets means your exposed. Number one was our home and personal assets (we no longer have a PPOR we sold that in 2003 and rented when we went to the next level of investing, wanted to have little in our personal names) Number two was our business run through a discretionary trust. Sort of stuffed up here as we also put one property in the discretionary trust, should have set up another unit trust and had the discretionary trust hold all the units with the property then not exposed if the business fell over. Number three pillar is a hybrid unit trust that allowed us to negative gear but now with that strategy having been superceeded our discretionary trust will hold units for any further acquisitions.

By far our super fund has been the pillar that is our strongest shirt both in now having no debt but more importantly if our other investments went belly up our creditors cannot access our super so we have a financial firestorm "keep" to retreat to. But you should not rely on the government honouring their pledge to not tax your super in these testing times and we are ready for that scenario too.

All our super assets are held in a Trevisan unit trust and all the assets are deemed as not being in-house assets under the SIS legislation.

Over the last year we have been preparing ourselves for the soft depression I have spoke about ad nasum on this site since last November.

Our next ten year plan is to tripple our existing assets. Our growth will come not from borrowing but from our internally generated returns that will finance further acquistions without negative gearing.

Because we saw this soft depression coming we have no business debt, no personal debt and our property trust LVR is 33% debt to 67% equity.

If you listened to the Wayne Swan interview this morning on the ABC you would have realised that he is preparing the Australian public for the news that the world growth figures for the western world including Australia are going to be a shocker for many years. Surprise surprise China is not going to save us from the soft depression.

For the forums further comments on the so called recession we are now in....

 

[Rob G.]

Yep ...

This thread started out by confusing two different issues.

Yes super (and especially SMSF for those so inclined) is a fantastic investment vehicle from tax and protection advantages.

As always, promoters got involved and proposed crazy ideas to maximise their fees.

Such as selling down IP's and putting money into super to hold in managed funds that their associates manage !!

Neglecting to mention CGT and even promoted borrowing to make the contribution which is the icing on the cake of stupidity towards the end of an economic cycle.

It is a shame the Government restricts the transfer of IP's in-specie, since this played right into the promoters' hands.

Cheers,

Rob

 

[MattR]

Hi SS's

Taking up from Rob, the $1M concession into super worked well for some clients and not so well for others.

A good case;
I had one client who sold (business) property in Qld. After CGT they had just on $3M left over so they (husband & wife) each utilised the $1M concession and the following year they then utilised the $450K concession, thereby getting all but the last of the $3M into super. Now, the majority of that has been held in cash, waiting for an opportunity to arise. And as they are near 60 they will soon take an income stream.



As for managers geeting greedy with the concessions, I reckon its only going to get worse with the ability of SMSF's being able to borrow (alibeit in limited ways). The amount of commissions going to be available would be making their eyes water.

I only hope that with the way the (financial) markets are playing at the moment that lenders use a bit more discretion or objectivity about who they lend to, cause the promoters sure don't give a rats!

 

[nonrecourse]

Yep ...

This thread started out by confusing two different issues.

Yes super (and especially SMSF for those so inclined) is a fantastic investment vehicle from tax and protection advantages.

As always, promoters got involved and proposed crazy ideas to maximise their fees.

Such as selling down IP's and putting money into super to hold in managed funds that their associates manage !!

Neglecting to mention CGT and even promoted borrowing to make the contribution which is the icing on the cake of stupidity towards the end of an economic cycle.

It is a shame the Government restricts the transfer of IP's in-specie, since this played right into the promoters' hands.

Cheers,

Rob

Hi Rob; Good post. You mentioned the government restricting the transfer of IP's in-specie. My brother in law did transfer a business property into his super when the one off allowance to put up to a million dollars into super was on offer.

In his case he had to pay capital gains tax and then stamp duty and then he had to refinance so that the property did not have a mortgage when it went into his super.

Of course the other problem now is you are limited to putting $450,000 into super in any three year period. Even if it is a husband and wife you can only put in $900,000.

I take it this is what you mean about restricting in-specie contributions. Its not restricted per say but because of the CGT and stamp duty it is an indirect restriction?

 

[MattR]

I take it this is what you mean about restricting in-specie contributions. Its not restricted per say but because of the CGT and stamp duty it is an indirect restriction?

Hi nonnie...

The in-specie contributions limits what can be put into super in its current form (in specie). The general limitations are commercial property and publicly listed shares. These can "simply" be transferred to an SMSF trustee without needing to liquidate them. This can obvioulsy trigger taxes such as stamp duty and CGT.

The aged based deductible (concessional) $50K and $100K limits and the non-deductible (non-concessional) $150K and $450K limits are the limits before the contributions are taxed at the top rate of tax. So you can actually put more into super than these limits, but you'll lose almost half in tax.

 

[josko]

Hi Greg,

We ploughed money into Super. First of all though, we set up a SMSF.

I am SO happy we did! We bought property with it.

Our SMSF property value increased by a massive 30%, and you could say now we have lost 10%. So, overall we have made 20% on our SMSF in the past 24 months.

Regards JO

 

[Max Carnage]

The "best" performer last year was -1.4% apparently.

Not true. I am with one of the biggest superfund providers in Victoria and my Net earning rate was 6.24% in FY 07/08.

 

[Qlds007]

Max

Want to list the name of the fund and we can have a look at the comparative performance charts.

Many funds had a + performance for the 07/08 Fin Year but the certainly werent invested directly in equities.