Superannuation

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From: Carlo Chiodo


Looks like my voluntary assistance was rudely dismissed by certain incompetents on this forum who had nothing better to do than make stupid genralisations because of their bad experiences.

Before you take these incompetents' DANGEROUS advice and some others and just DISCOUNT super maybe to your detriment do your research, find out the loopholes, check out your personal situation.

Im not one purporting that making voluntray contributions is enough and this will save your life. NO WAY. But there are a helluva lot of strategies with super, tax mnimiation or other.

For example, consider ONE of the benefits of a SMSF for a small business owner that owns their own business property.

If you have a certain amount of funds in your super that you have accumulated over ur life, you can actually buy the business property from yourself WITHOUT paying Capital Gains tax on that premises (up to a$500G lifetime limit). The other benefit of this is that it lets you TAKE OUT those LIQUID funds from your SMSF to replace with your property. Theres even more you can do here but I wont go into that. For example, you dont even need the market value of the property in the funds due to the ability to do an inspecie transfer of CGT exempt. The property now has a new base value for CGT at today's mkt value.

There is alot more with this strategy but i am not going to go into it (ie possibility of never paying CGT on this property).

Superfunds can be used to purchase residential property as well (though not off yourself, although...). Surely some of you out there are 55 and are on this forum as you are interested in property. If you have the money in ur superfund, why not buy it through there. With careful planning, you wont even need to pay CGT on those properties via an SMSF because they can be transferred to fund an allocated (or complying) pension. Furthr your rent will only be taxed at 15%. The only drawback is you cannot employ negative gearing within the super fund.

So as per my previous post which some people so rudely discounted, I would not discount super completely as part of your overall investment strategy. Sure its NOT the greatest of investments, but it could FORM part of your overall investment strategy.

I personally dont have a superannuation fund, it does not cater for my current situation. However Im sure mine is different from most others out there.

Anyway thats my two bobs worth, again. For the record I am a legal supernannuation consultant to a large organisation and willing to answer any queries you may have on superannuation, helps keep me up to date if I have people discussing it with me.

For the record, there are now OVER 210,000 SMSFs out there, with an average account balance of over $300,000. These are professional investors who realise the benefits of having part of their portfolio in superannuation.

Feel free to email me at Carlo_Chiodo@norwich-union.com.au

Regards

Carlo
 
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Reply: 1
From: Gail H


Thanks for the advice Carlo. Don't take people's replies personally. People have very passionate views about things and their opinions are sometimes expressed a little too robustly. Your advice is most welcome and appreciated.

Do you recommend a minimum amount that you would need to have before it would be worth starting up your own fund (apologies if you answered this previously).

I have about $80,000 preserved in a fund somewhere which is basically just sitting there. I am now self-employed (though not incorporated and I don't own business premises) and not contributing anything further. I can't afford to contribute a great deal each year - maybe $5000 or so. I'm not sure if its worth it. I hate the thought of my money just sitting there. Should I do something with it, or is it too hard to say with so few details? My main investment strategy, like most people here, is to put as much into IPs as I can.

Thanks for your advice, and I think its great to have a super expert posting to the forum.

Regards
Gail
 
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Reply: 1.1
From: David Lutan


Gail,
I have my own SMSF with around $90K. The costs (set up and audit fees) are on the high side but for me it has been worth it. I do contribute a sizeable amount into my super on a yearly basis. I have learnt so much about the "Business aspects", particularly prudent management of my future nest egg.

There is some confusing jargon out there concerning Superannuation, but if you can keep at it, all of a sudden one becomes "enlightened". There are now many industries supporting SMSF's which means you have an opportunity to get better returns than the big dudes. For example, if you wish to purchase various managed funds at wholesale prices then something like "Your Prosperity" (not a recommendation!) is very useful and you can generally accumulate funds at significantly reduced costs than otherwise.

Good luck
Dave
 
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Reply: 1.1.1
From: Jeremy Laws


Carlo,
If a hungry cannibal split open your skull, I doubt he would find enough inside to cover a small water biscuit!

I never look at how much super I have simply because doing so destroyed the last 5-10 years of the working life of my father, with the govt. changing super rules every budget. (Funny - how many other contracts do we sign when our side of the deal is unchangeable, yet the other will change at least 20-30 times!) It wasn't until I spent some time talking about this with a close friend that I became mildly impassioned about the subject. Sadly for you this was a day or so before your 'DANGEROUS' post.

Incompetent? Well lets look at my super! At age 30 it was worth roughly 80-100k. WOW impressive! I started work at 20 so that was 10 years. To compare with what I did myself WITH AFTER TAX DOLLARS it is a complete joke! I had made (starting at 25 ie 4-5 years) a nett million dollars _comfortably_. Getting back to your precious CGT problem. What would you rather have? A tax free 100k, (which will probably be taxed anyway!) or pay even 50% on $1,000,000. hmmmmm tough choice! Maybe for you (read para 1 again!) but not for most of us!

Referring to me as incompetent (if you did, and I think you did!) is as laughable as your support for super! I (and I am by no means a genius) can outperform ANY super fund you could mention by a factor of at least 1000%, in any year over any time frame you pick!

Super buying property outright? Explain to me why it is that so many other people I know save up 110% of the property price to buy property. If its so smart - why isn't everyone doing it??

What you are suggesting ar small minded ways of EXTRACTING money from a very poorly performing 'fund'. Even you are admitting you should get it out, and you are living off the fees people are paying you with their (my!) hard earned dollars.

Could form Carlo, Could? Could?? Its such a bloody rip off cos its bloody compulsory!!!! Professional investors, my dearest Carlo would refute any suggestion that Super is an 'investment' at all.

Having said all that the govt. in it's infinite wisdom has forced us into giving you (as someone who bleeds his existence from the super industry) money on our behalf, and if you can help me get it out as soon as possible then I am all for you. I suspect it is harder to do than you think. You directly lied to us in your last post by suggesting the Unit share idea of getting into property. I hope the advice you now bandy about is more useful!

If you can get me out of my super fund (Qantas Staff) I will GIVE you as a thank you 5% of its nett value. I think at the moment that would be about $10,000. I am absolutely serious about this offer.

Now _thats_ probably the best return you will get in your life!
 
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Reply: 1.1.1.1
From: Rachel Freedman


Hmm I am not sure I want to get my head bitten off but.....

It is OK for you Jeremy to say "Super sux don't do it" but for many people (for various reasons) super is a safety net.

Just because people read this forum does not mean that they are brilliant investors who are going to make their million in property -now I hope a lot do (me included!).

Now you may say anyone that cannot make a million in property is stupid and that no-one should ever need to rely on Super but I find this a bit condescending as people have different fears to overcome and different risk profiles and hey - we all make mistakes and shit does happen! Hopefully we have all got it figured out in time for retirement but maybe not!

Choosing to hold money in Super is not just about whether it is the most rewarding financial strategy it is about comfort levels and risk management.

I do not trust the government and we have to accept the risk that we will end up with bugger all of our money but it does make us sleep a little better to know that even though we are buying property and shares etc we have got a bit of money tucked away that will hopefully be the icing on the cake of our retirement wealth not the mainstay of it.

And I also think it is great to have people with different perspectives on the forum ie Carlo and while being analytical and questioning we should try not attack people as it reduces the openness of the forum as people become afraid to put their view forward and the forum will be dominated by a few personalities.

That's it for now!

Rachel
 
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Superannuation - your prosperity

Reply: 1.1.1.2
From: Lotana Von Amor


I tiny comment on Your Prosperity. There is no need to set up a SMSF to have access to wholesale managed funds and to enjoy freedom of taking your own investment decisions regarding your super money. I rolled over just $20K of my super to the YP's super trust and have full access to hundreds of wholesale funds which I can buy and sell on line. To me, there are no benefits in setting up a SMSF bearing all the set-up and running costs when you can enjoy the same level of control at a very low cost. YP charges 0.65% of the total balance on to of individual funds fees (wholesale funds typically charge between 0.5 and 1.5%).

This is not a piece of advice, just sharing my own experience.

I don't hold any interest in Your Prosperity.

Regards,

Lotana
 
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Reply: 1.1.1.3
From: Stephen Burman


I think some people are confusing Super as an investment type when it really is a structure (just as a JV, a company and a trust are structures). With some exceptions the primary driver of returns is the investment itself not the structure, although obviously the structure can and does help.

There are a couple of caveats on this, firstly if you are constrained as to which investment your super goes into (as Jeremy would appear to be with Qantas) then you may well have little choice over which investments are bought within that fund and/or the fees that are charged. I'd agree this is a bad fund but not necessarily an indictment on super itself. Many people have a lot more choice as to what fund they use, what it invests in and even the fees they pay. A DIY Super fund is about the ultimate in this but regardless the government seems to be moving in the right direction as regards choice of fund.

The second major caveat is choice of property as the investment. While you can do this the regulations around borrowing do make this a lot harder to do the sort of things most people on this forum are trying to do.

The solution, if you can use super to invest in other investments than property, if you can find the best managers or if you think you can do better do it yourself. But invest in property outside of super.

Steve B
 
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Reply: 1.1.1.3.1
From: Gordon Austin


Hey Carlo,

Good on you for having the courage to discuss super on a property forum. This will quite often bring extreme opinions.

I must admit that I'm not a great fan of super but it can have its place in ones portfolio depending on the nature of the investor. Mostly I don't like tying up my money till 55 to 60. But from what I understand (might be wrong) super does provide asset protection up to approx 940K or there abouts. Most planners that I have spoken to have recommended ploughing most of the intended super savings into it as you get closer to the age that you can get your hands on it. That way you can take advantage of favourable tax advantages etc and you haven't had your money tied up over a long period.

Anyhow I admit I have very little knowledge about super. However Carlo is offering those "who are interested" free information that many people pay lots of money to get from planners etc. I for one am grateful to professionals and/or knowledgeable individuals who are willing to do give their time for free as I'm always hungry to learn more about all aspects of investing.

GA
 
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Reply: 1.1.1.1.1
From: Michele B


Maybe it comes from mixing with some of the original, independent thinkers on this forum or maybe it's the getting of wisdom (at last!).....but these days I just want to do things in my own way. Put my own spin on the ideas I pick up.

I don't like being told how to live my life or at what stage I ought to be 'retiring', a word I actively avoid using. I also don't want to submit to RBLs or buy into some annuity at some pre-determined point in my life. And I don't like my security being used as a political football.

While I recover what I can from the shreds of my (now pointless) SMSF investment strategy, I am focusing instead on a completely DIY financial future. I want to sever my connection with the system so that what I set up will continue until I say stop. I know now that I can only rely on me.

michele
 
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Reply: 1.1.1.3.1.1
From: Jeremy Laws


I am interested GA - Carlo should be to - apart from his livelyhood (I think I would rather sell lottery tickets and steal poeples money that way) but he now has $10,000 riding on it!

Rachel, its not that it forms part of a strategy - is HAS to be there,It is COMPULSORY - ie no damn choice at all! Super is mainly just a forced cash box for the government, growing every year! Its just such a terrible waste (except from Carlo's point of view as it provides his living)

I am not saying 'you are stupid if you can't make a million in property' just not dedicated! I would like to point out that ANY investment - shares, property, Tea trees, or even goldfish futures I think would out perform Super!

Another question then for Carlo the brave defender of the indefensible (he has my respect for that by the way! General "Custer" Carlo!) - Is there an asset class that has performed WORSE than super? - I _may_ have been joking about the goldfish futures - I'm not sure you can get them!
 
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Reply: 1.1.1.3.1.1.1
From: Sim' Hampel


I'm right with JL on the subject of super (even if I'm not quite so zealous in my criticism of it !)

I guess it's because we are young, decently paid, control freaks, who take issue with being forced to prop up the governments whims.

My super is paid into my companies super scheme, and I have almost no control over where it is invested. I cannot have my super paid into my personal fund, or into any other fund of my choosing.

And because I will not be able to touch it for at least 40 years, to me it is completely dead money. I can't leverage against it, I can't draw upon it for that deal of 5 lifetimes, I can't keep the government from stealing it, and I can't even see what it's doing because they only have to report on progress once a year, and then only in vague terms.

I do acknowledge that super does play an important part in a lot of people's financial future, but the concept of insisting that I am not only forced to have money there to prop up the system, but that I have almost zero control over it really gets to me.

The proposed "super choice" legislation from a couple of years back was exciting - but they whimped out on that - I was rather annoyed.

 
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Reply: 1.1.1.3.1.1.1.1
From: Jeremy Laws


Sim,
Agreeing with me!? geez thats thrice now! At least GA sort of disagreed! There is another way to look at this - If Sim and GA are agreeing with me - maybe I _am_ wrong:)
 
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Reply: 1.1.1.3.1.1.1.2
From: Mike TheBloodyIdiot


Sim,

Mate you are so nice person, you seem to be able to put up with any crap Government/Banks/Other Bastards(like myself) throw at you.

"Freedom is just recognised necessity" - were you Karl Marx in your previous life?

Can't get your money from super? Can't gear? Are you in Australia? Just everybody who is not too lazy gets their money from super as they wish (starting from Mr Howard)

First, you are right you can't make your employer to put money in your super fund. Do you need to?

If you guys cared about not buggering Carlo, he probably would be able to tell you that you can rollover up to 90% funds from your existing super into your DIY superfund. I do it once a year, but some clients of my accountant do it monthly.

So money are in your DIY fund, they are closer, but still not in your wallet. Does it mean it should be this way?

Let's consider the most straightforward and most stupid tactics (which I am not going to use anyway). Buy shares. In your name, for your own money. When they go up, sell them to your fund. When they go down, buy them from your fund. They up again - sell them to fund. Down - buy. Up-sell.

Eventually lion share of fund's money end up in your wallet.

Is it too complicated? This is primitive. And there are dozens of techniques a bit more sophisticated than this one.

But if your mind is ready to accept things the way they are, you will miss just every opportunity that is around.

Even more unwise, if somebody offers you some knowledge to kick them away.

Carlo, would you mind if I usurp the title you were granted in the other thread, I like it too much - "self deluded idiot" - it is my perfect description.

Cheers,

Mike - TBI, SDI
 
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Reply: 1.1.1.3.1.1.1.2.1
From: Michele B


Mike
Devising tricky dicky ways to milk your super fund isn't the point. That current legislation has rendered super almost useless for its intended purpose - that IS the point.

Disappointing returns for employees are the norm - even Peter Lynch was scathing about the limitations of managed funds! As for the safeguards imposed on SMSFs - may as well hogtie me then ask me to run a marathon. Mind you there was nothing to stop me sinking the lot in OneTel!

michele
 
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Reply: 1.1.1.3.1.1.1.2.1.1
From: Mike TheBloodyIdiot


Thanks Michele,

100% agree with every your word.

What I am saying that with a bit of creativity you can milk this dead cow.

To be creative, you need knowledge.

DIY super is a grey area, mainly because authorities do everything to hide info from you. Have you tried to submit e-mail inquiry on the ATO SMSF site? I did a few times. What they do, they send you their standard SMSF brochure, and a letter saying that you can do anything you want, but according to requirements of their brochure. And they rmind you, that SMSF is not taxation, so you are not allowed to request private ruling.

Another bright example - there used to be a link "Property ownership - Joint Tenants/Tenants in common". By the time I got to it, they already put "Document removed pending review" on the link. After few months they removed link alltogether.

Does not it look suspicious? What they are trying to hide and why?

Carlo has the knowledge, it is beyond any doubt. So we should find out what he has to say. It is not necessary to agree with him on everything (In fact I almost never agree with what I say myself), but it is shame we do not want to listen.

Cheers,

Mike - TBI,SDI
 
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Reply: 1.1.1.3.1.1.1.2.1.1.1
From: Michele B


Always, always willing to listen Mike. Who was it said that changes in your life come via the books you read and the people you meet.

As for milking cows - dead ones don't work well long term.


michele
 
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An open discussion... free exchange on info...

Reply: 1.1.1.1.2
From: Ross Sondergeld


Hi Rachel,


Rachel said, "And I also think it is great to have people with different
perspectives on the forum.... we should try not attack people as it reduces
the openness of the forum as people become afraid to put their view forward
and the forum will be dominated by a few personalities."

I agree. I talk to quite a few somersoft lurkers. And many are a little
timid to comment and discuss. You see, I support, the free exchange of ideas
and info...

So if you're totally "pissed off"... then take a break and relax.

Don't forget, we're ALL running a different race.



Ross Sondergeld ~ Buyer Agent ;-)
Buyerside Real Estate on the Gold Coast

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