Voluntary Super Contributions

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From: Jodie Hill


Hi All,
My husband and I are new to property investment and plan to buy our first IP later in the year. Having read Jan's books again after them being shelved for a few years I've come up with an issue I can't recall her addressing. She mentions not tying up income in health insurance but what about voluntary super contributions. It's a given that super doesn't cut the grade so should my husband stop paying his $478/month contributions out of his pay and have an extra $478 in the credit line
 
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Reply: 1
From: Rolf Latham


Hi Jodie

Not clear cut this one.

Much depends on age and the level of taxable income, and if the empployer makes an extra contribution for the your extra sacrificed bit.

Ta

Rolf
 
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Reply: 1.1
From: Jeremy Laws


Don't ever, ever, ever, EVER pay anything more than you absolutely MUST into super. It is a con, you will get precious little of your money (if any) back, and if that isn't enough - the only people who will make money out of your super are superfund managers. I have based everything I have done on the firm belief I will get basically none of my money back. It is a very good premise to work from.br>
 
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Reply: 1.1.1
From: Robert Forward


I do somewhat share JL's views. However, I think it also depends on the circumstances of each person.

I also pay and extra 5% of my pre-tax $$'s into my super and work adds another 3%. I don't mind this at the moment as I may be tying up $400pm for a gain of $240pm extra into my super fund.

My reason for not minding is that I do not intend on working in the rat race and am currently working at an exit strategy. Once I leave the rat race I will transfer the employee super fund over to a SMSF which I will then retain control of. And to make it worth retaining control of suggested figures that are needed in the account is $50k+. I can then use this money in my own super trust account to play on the stock market, or buy a house (yes I know that I can't borrow in a Super Fund) that provides high returns.

To me it really depends on what your ultimate goal is that you want to achieve. I have also heard lately that the government has relaxed the laws for those that intend leaving the country permanently and you can once again withdraw your superfund if you do this. Of which I have done once before back in 1997 before the government stopped it.

Cheers
Robert

Property Inspection Reports @
http://www.creativefinance.com.au

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.1.1
From: Jeremy Laws


Robert,
You will find how dreadful and draconian those SMSF laws are - IF you can get them out by the time you want to. You have a very rosy view. The govt needs super money to run the country - it will only get worse. Did you know in US you can't get super (401k) money out until 67?? Do you think that won't happen here??
 
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Reply: 1.1.1.1.1
From: Robert Forward


Yes, I understand where your coming from Jeremy. But with the law changes I will be able to access my Super when I move back OS again, somewhere in the next 3-5 years.

I have friends that are moving back over to the UK at the moment and they have put in the paperwork to have their Superfund monies paid back to them.

For most people it won't work I agree, but there are some ways around it. Mine is to leave the country once again, and not simply cause I want to get my SuperFund money but because I want to live OS again. So why shouldn't I take advantage of a loop hole if it's there.

But then again, the government can and will change their mind at the drop of a hat again, they always seem to do don't they.

My opinion, is that the Fund Managers have pushed the government into allowing those that permanently leave the country to take their Super money with them as the Fund Managers were loosing money maintaining the accounts and the laws state that they are only allowed to charge "X%" now.

Cheers
Robert

Property Inspection Reports @
http://www.creativefinance.com.au

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.1.1.1.1
From: Jas



> Yes, I understand where your coming from Jeremy. But with the law
changes
> I will be able to access my Super when I move back OS again, somewhere
in
> the next 3-5 years.

>
> I have friends that are moving back over to the UK at the moment and
they
> have put in the paperwork to have their Superfund monies paid back to
> them.

Hey rob,

Have the laws changed now, or are you saying they'll change in the
future re "taking super out if you're going o/s"?


Jas

To paraphrase Charles Mackay - By the vile arts of stock-jobbers!
 
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Reply: 1.1.1.1.1.1.1
From: Robert Forward


In 1997 I just beat the changes in the laws and was able to access my Superannuation, though I did have to pay tax on it.

The government did, about that time, change the laws that stopped people who permanently leave the country from taking their Super money with them. This, I believe, caused a few Super Funds to get upset cause they were managing funds that were worthless of which they were losing money on in managing them.

Now, I have some friends that have worked here in OZ for the last 13 months and have applied for their Superannuation to be paid out to them. I was unaware that the government had possibly changed the laws to allow this again, and admittedly, I have not chased up to see if this is correct (it may well not be). It's just my friends have their applications in and told me what hoops they had to jump through to get the money. Of which is the same way I had to get mine back in 1997.

So anyone out there that has the knowledge that can prove this one way or the other it would be great.

Cheers
Robert

Property Inspection Reports @
http://www.creativefinance.com.au

The Sydney "Freestylers" Group Leader.
 
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Reply: 2
From: Carlo Chiodo


Jeremy, what a stupid generalisation to make!!!

I am a superannuation consultant (as well as part time IP investor)

Superannuation can be very beneficial for those wishing to fund retirem\ent, and now with superannuation exempted from the ASSETS TEST for over 55s, it has become even more valuable.

This basically means you can have $1 million tied up in super yet still be eligible for Centrelink pension assuming u satisfy the assets/income test.

When u say VOLUNTARY super, are u talking about PERSONAL contributions, COMPANY ADDITIONAL, or SALARY SACRIFICE???

The best of these is PERSONAL because they are not taxed when they go in.

As some people have stated, super is best for the closer you get to retirement.

However, the earlier you start, the better, although you must be disciplined. A lot of people have become disenchanted with it over the last couple of years, why, because of POOR investment returns, negative media etc.

All a load of rubbish.

Personally I dont think superannuation is as good as IP investment, but for those that havent got the capital or are risk adverse, super is fantastic.

Then u have the option of combining super and property together, ie purchasing a property via the super fund. Super fund cant lend, but u can set up a trust outside the super fund which can borrow and then the super fund can buy a unit in the trust giving it direct property as an investment.

If you want any answers on super, email me at Carlo_chiodo@norwich-union.com.au

I am not an adviser so am not selling anything, I just happen to know a lot about super and am willing to answer questions on it.

BEST thing to do would be to shop around for a GOOD, reputable financial adviser (theres some dodgies out there).

Carlo
 
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Reply: 2.1
From: Sim' Hampel


On 4/6/02 2:25:00 PM, Carlo Chiodo wrote:
>
>This basically means you can
>have $1 million tied up in
>super...

This is exactly what scares most of us under 50 years of age... the words "tied up".

You lose an incredible amount of flexibility and even more control (unless you are willing to walk to SMSF tight-rope) for those "tax advantaged" returns.

 
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Reply: 2.2
From: Michele B


On 4/6/02 2:25:00 PM, Carlo Chiodo wrote:

>Super fund cant lend, but u
>can set up a trust outside the
>super fund which can borrow
>and then the super fund can
>buy a unit in the trust giving
>it direct property as an
>investment.


Not any more Carlo - this loophole was closed some time ago.

michele
 
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Reply: 2.2.1
From: Kevin Forster



I'm with Jeremy that super is a con after having my super fund return for the last financial year a -1.38% on a BALANCED fund. Then the government wanted a portion of it taxed at 30% because I'm over the limit that can be put into super at my age. All that I'm putting in is the minimum of 8% employer guarantee.

I also noticed the fund manager still got paid his/her percentage to lose money. Can you negatively gear a super fund? Another 30 years of that sort of return and I won't even get out what I put into it.

Thank goodness for IPs

Kevin
 
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Reply: 2.2.1.1
From: B F


I read recently that the rules may change after the next federal budget to allow your super pay out when you leave Australia.

The catch, and isn't there always. If you are eligible to return for the pension you can't take the money.

So it is primarily designed for those who come to Australia to work short term, not for residents departing.

BF
 
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Reply: 1.1.1.2
From: Jeremy Laws


I thought I replied to this before, but its got lost! If you think you will ever get your super you will be sadly disappointed. In the US the super attainment age has just reached 67. Do you have complete faith that 1) No government will change this up again and 2) The same thing won't happen here? My industry the age has changed from 55 - 60 in the last few years. The govt needs super money to keep running the place. The age will go up and up and the tax will go up and up. Easy! What a waste of time and money. Get your money out while/if you can!
 
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Reply: 2.2.1.1.1
From: Steve Navra


How good is super??

Well say the average return on a super fund is 8.25% (Yeah, yeah you wish - is what you might be thinking.) - but lets say it is.

But then, you can get 5% return on a cash long term fixed deposit.

Do you receive the return on your super, like you do with shares (dividends) or property (rent)??

NO - it is reinvested so:
If a cash return is about 5% - then what are you actually getting from your super without the reinvested income??

8.25% (Total growth) less 5% (income return)

So that's about, hmmmmm lets see = about 3.25%

Wow that's good! AND you can have it when you are 60!! (Boy oh boy I can't wait)

Where do I send my cheque?? Please tell me quickly I could be missing out here.

Have any of you noticed how many people are fully financially independent on wonderful lifestyles out there - living off their super??

Yeah, I thought not.

See, now just about everyone must have super these days. (SGC)

Funny how just about everyone isn't rolling in retirement income.

I must be missing something??

Please set me right??

Regards,

Steve
 
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Reply: 2.2.1.1.1.1
From: Jeremy Laws


Steve you are right!
Carlo you are a self deluded idiot!

Worse still is you are so deluded that you are deluding other people!

Quote from Balckadder Goes Forth before you get too upset.
 
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Reply: 2.2.1.1.1.1.1
From: Michele B


Having money trapped in an SMSF is even more frustrating Steve.

Since the SLAB (was it 3 or 4?) amendments were introduced to prevent further investment via unit trusts, it's become almost impossible to make effective use of any funds which might have become 'trapped' in your SMSF.

Maybe the only way to more effectively use these (wasted) funds is for small groups of SMSF's to pool their resources to buy IPs outright, concentrating on c/g or high yield properties depending upon the needs of the group. Hmmmmmm - anyone want to explore this idea?

michele
 
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Reply: 2.2.1.1.1.1.1.1
From: Paul Zagoridis


Actually if you can combine (about 20?) small SMSF they can still then buy into a leveraged investment. From memory SLAB 3 or 4 introduced a max 5% related entity test. No more than 5% of a SMSF's assets may be invested in acquiring an asset form a related entity unless it is business premises of the beneficiaries/members.

So lots of SMSFs can buy into a unit trust, that you DON'T set up. That way it is an independent entity. That entity can borrow money. This is akin to buying listed shared or unlisted property trust.

You've basically got yourself into the unlisted property trust biz then. Now the effort of coordinating that deal may be a too much. It may even work with fewer SMSF's, just make sure it is an independent entity.

Having fun yet?

Paul Zaq
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 2.2.1.1.1.1.1.1.1
From: Terry D



HI, GEOFF
IS THIS WHAT YOU WERE LOOKING FOR ?

TERRY
 
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