Superannuation payout

From: Tom Cleary


Would appreciate any suggestions on a superannuation payout.
Situation is:was cleaned out on a divorce settlement, 100% to her of family home and business approx. $400,000
However kept superannuation,payout $290,000
Am presently renting and at 58 just working part time approx $300 per week.
Any creative suggestions would be appreciated
Regards
Tom
 
Last edited by a moderator:
Reply: 1
From: Mr S


Hi Tom,

Rough calculations..(

If you buy 2 Brand new apartments Bankstown Sydney for around 200K each and place a deposit of 100K on each of them they will be neutrally geared and pay them selves out with in 10 years.

They will rent in todays money for a minimum of $225 each per week or $23000 pa.

With the 90K buy a unit in Campbelltown Sydney to live in. I suppose you'll need to continue to work part time for food. But you'll be debt free in 10 years and earning about 20K a year.

If you live in WA... this does not help you...sorry

Anyway - All the best - Martin
 
Last edited by a moderator:
Reply: 1.1
From: Paul Zagoridis


Except poor Tom's cash is tied up in super. I'm assuming you must keep your super preserved until age 65, if this is not the case, please let me know.

Tom could set up a Self Managed Super fund. About $500-$2000 depends if you have a corporate trustee or not - probably not. This will cost between $500 and $2500 per year to run. Most of that cost is auditor fees, so talk to your accountant and ask for a discount.

Roll over all super into it.

Now you have choices. Given your Super fund is not allowed to borrow ANY funds you can

1)buy property outright and
a) trade the portfolio up in value;
b) settle for rental income;
c) buy extremely well from motivated vendors;
d) rehab;
e) find a quick cash property syndicate to put some money into;
f) some other real estate trick to add value.

2) put it into the stock market

You could even explore REALLY creative ways to access your super, maybe even find a private lender who will lend against the future value of your super. This is extremely risky in the legal and financial sense.

Keep posting I may think of something else.

Dreamspinner
 
Last edited by a moderator:
Reply: 1.1.1
From: Tom Cleary


Thanks guys for the replies.
1. Yes i've got a DIY super fund
2. Preservation age 55
3. Want to keep working for a few more years at least
4. Cannot gear or take a charge over the Super fund.
5. Cannot invest a residence for myself
6. Friend in super industry says most funds will be drowning in red ink this year for which the punters will have to pay a 4% entry fee and 1 1/2% management fee per year!
No thanks, I will do my own investment, but need to decide what proportion to put into property and or shares
7. I'm expecting a recession to hit soon (actually its already here but Treasury is fudging the figures) Should be a short sharp one , providing the government doesn't try to help,in which case it will last longer. Should be at its worse around Oct/Nov and start to pull out about Feb. of next year.
So do I stay cashed up or what until I see if I'm right?
Regards
Tom
 
Last edited by a moderator:
Reply: 1.1.1.1
From: Paul Zagoridis


If you are 58 and preservation age is 55 and the lump sum is only $290K you have options

Why can't you take a lump sum and gear to your comfort level (positive or negative cash-flow)? That now allows you to buy a residence or borrow. That removes all the restrictions of the super system. Plus you'll save your audit and compliance costs on the super fund.

If your serviceability is a problem look at buying cash bond to improve it.

Remember your life expectancy is at least 20 more years so don't be too conservative. If you limit your investment options to "conserve your capital" (or limit tax) you may find your income is about the pension level.

Dreamspinner
Your film is in trouble when... http://www.healey.com.au/~paulz/trouble.html
 
Last edited by a moderator:
Reply: 1.1.1.1.1
From: Tom Cleary


If you are 58 and preservation age is 55 and the lump sum is only $290K you have options

Why can't you take a lump sum and gear to your comfort level (positive or negative cash-flow)? That now allows you to buy a residence or borrow. That removes all the restrictions of the super system. Plus you'll save your audit and compliance costs on the super fund.
>in a word - bloody up front tax almost $22k,
>escape that by rolling over into a fund,b >but must pay 15% on contributions to and earnings of the fund
If your serviceability is a problem look at buying cash bond to improve it.
>cash bonds are paying less than 5%,may not be enough for serviceability, and may have income implications two years down the track, when turn 60.

Remember your life expectancy is at least 20 more years so don't be too conservative. If you limit your investment options to "conserve your capital" (or limit tax) you may find your income is about the pension level.
>don't want to be too conservative,but hands are tied by SLAA 4 ruling

Dreamspinner
Your film is in trouble when... http://www.healey.com.au/~paulz/trouble
Regards
Tom
 
Last edited by a moderator:
Reply: 1.1.1.1.1.1
From: Paul Zagoridis


Hi Tom

Sure you pay $22K in tax but you can then borrow for growth or income. Leaving it in super means your return on equity is capped at your ROI. If you can gear, your return on equity is enhanced (provided ROI > Interest Rate). As you said, your hands are tied by SLAB4. What's it costing you per year to run the fund?

You pay 15% on contributions and earnings plus you pay (15%?) when you withdraw. And you'll be retirement age soon. You need better advice that you are currently getting. I can't see how leaving your only asset in super (to save tax) enhances your wealth in 5-10 years. Sure it's safe provided you pick well in the stock market.

Cash bond returns are apparently treated as income in DSR by some banks (including the return of your capital) so it's not the 5% interest rate we want, it's the $X per year as evidence of serviceability. Seems like double counting to me but Steve's got it worked out and it looks good.

Plus even if you bought a $200K cash bond @ 5% your taxable income from it doesn't exceed $10K pa. So you shouldn't have income troubles when you turn 60

SLAB 3&4 stopped the more inventive financial planners out there. But the real aim was to ensure people planned for their retirement. You are close enough that you can manage your own retirement funds. Think of it as retiring early.

If you do leave it in super and decide to invest in RE, I think your choices are with $0 borrowings:
1) renovate your way to wealth
2) buy from distressed sellers (then flip or hold)
3) join a managed investment scheme aiming for high returns (let me know if you find one of these)

There may be other options that I can't think of. Maybe others can suggest some.

Paul Zag
Dreamspinner
 
Last edited by a moderator:
Back
Top