First home saver account - poor man's superfund

[son of baglimit]

this info was passed onto me recently - a nice little earner for those that qualify, and in practice it becomes a poor mans superfund - for someone who will never own a home (for whatever circumstances), would like to put money away for rainy days (retirement) but cant really afford to.

to qualify for this poor mans superfund....as opposed to the FHSA.

aged between 18 & 65.
have a TFN.
never owned a home.
happy to put the money away until they reach the age where they can qualify to withdraw it again from super.

now ignore all the info - just use this calculator......

http://www.fido.gov.au/fido/fido.nsf/firsthomesaver

on the initial page, to avoid the qualifying questions, just answer yes.

on the next page the only field to change is the "how much can you save?"

enter $1 (hence the poor mans superfund)

the interactive graph on the right shows the balance growing, but at an amazing rate considering the measly $1 per financial year being contributed.

AND THAT MY FRIENDS IS THE FUN.

click on "show working" and move to the 8th column - government contribution.

the government will pay a 17% co-contribution to the account (maximum $850).
17% of your $1 is not much, BUT the good old government (assuming for admin reasons) pays a minimum co-contribution of $20.

hence you get a $20 government contribution on your $1.

yes folks it aint much for the ASF crowd, but as a poor mans superfund, its money for nothing.


*****to avoid moving off topic, please dont post political comment on this thread (despite the need of many of you)

 

[Kryzz]

Re: First home saver account - poor mans superfund

Does anyone know if the govt pays 17% per year on contributions only or the balance as well?

Seems unlikely it would be the balance, because 22% (inc. bank interest) a year guaranteed (obviously making the presumption interest rates don't move) sounds too good (ie, the govt wouldnt give you 17% on balances of 20k for example, in latter years surely not?)

http://www.commbank.com.au/personal/accounts/firsthomesaver/

 

[drsmith]

Re: First home saver account - poor mans superfund

The guff.

http://www.homesaver.treasury.gov.au/content/fact_sheet/Account_Holders.asp

 

[c-unit]

I still haven't received my government contribution for the money i put in last financial year. Looks like Swanny has empty pockets after blowing $100b on wasted stimulus money so the good savers amongst us will be missing out!

 

[son of baglimit]

I still haven't received my government contribution for the money i put in last financial year. Looks like Swanny has empty pockets after blowing $100b on wasted stimulus money so the good savers amongst us will be missing out!

thanks for the political comment c-unit.

the contributions are paid in january at the earliest.

 

[c-unit]

thanks for the political comment c-unit.

the contributions are paid in january at the earliest.

No problem.

Thanks for the info though, I couldn't find any details as to when they pay it. Commbank didn't even know. Appreciated. Any idea why it takes so long? Not that it really matters given it's a long term scheme.

 

[poverty]

I'm poor and really like this account

An instant 17% on $5500 (it goes up with indexation) and then interest on your whole balance makes for some pretty awesome compounding. I'm going to max it out each year for my wife and I.

On top of $1000/year co-contribution for wifes super and around $300 for mine it makes for over 3K of government charity for us each year.

 

[akkopower]

No problem.

Thanks for the info though, I couldn't find any details as to when they pay it. Commbank didn't even know. Appreciated. Any idea why it takes so long? Not that it really matters given it's a long term scheme.

I rang the ato the other day, trying to find out when they will pay their contribution.

they said
<60 days after u lodge yr tax return they will send the contribution to your bank and then the bank has no longer than 30 days to put the funds into yr acct.

 

[maffu]

I rang the ato the other day, trying to find out when they will pay their contribution.

they said
<60 days after u lodge yr tax return they will send the contribution to your bank and then the bank has no longer than 30 days to put the funds into yr acct.

Thanks for that. When I signed up the Commonwealth Bank employee had no idea how quick the government would pay the contribution, and its not in any of the paperwork. I assumed it would be pretty slow.

I lodged my tax return last night, so I will wait and see how long it takes.

In other news, the Commonwealth Bank is no longer offering these accounts because so few people took them up.
http://www.news.com.au/money/proper...ome-scheme-fails/story-e6frfmd0-1226118607888

Belt tightens as first-home scheme fails

EXCLUSIVE by Ben Pike
From: The Daily Telegraph
August 20, 2011 12:00AM


THE nation's largest home lender has stopped offering the federal government's vaunted First Home Saver Account - because no one wants it.

Before coming to power, Labor held FHSAs out as having the potential to revive the Great Australian Dream for young home-hunters. Treasurer Wayne Swan anticipated $4 billion would flow into the accounts. But, five years on, the latest figures show less than 5 per cent of this amount - $173 million - is being saved in FHSAs.

The Daily Telegraph can reveal the Commonwealth Bank withdrew the product earlier this month.

A CBA spokesman yesterday said 95 per cent of home-hunters preferred to save through term deposits and savings accounts "as opposed to using this particular product".


Even getting parents to go guarantor was more appealing.

The spokesman said customer feedback was that the FHSA was too complex and they didn't want their cash locked away for four years.

Another likely turn-off - it's impossible to accumulate enough for a deposit on the average Sydney home.

Everything you need to know about the First Home Saver Account

CBA has only six FHSAs containing the maximum $85,000. That's $35,000 shy of the amount needed to avoid mortgage insurance on the median home.

"For Sydney, that cap is low. That would be an appropriate deposit for a small town," Paul Smith of home finance brokers Loan Market said.

FHSAs attract a 17 per cent government contribution on the first $5500 deposited in any year. Individuals have to save the money for four years and must use the amount saved for a home loan.

Although the government aimed to have 400,000 accounts by 2010, it has only attracted a total of 27,400.

Mr Smith said: "People are largely unaware that the FHSAs exist. It has not been marketed to the public. While they have made changes to the scheme to make it easier, it has not been publicised to the same extent as the First Homeowner's Grant."

The government has decided advertising other measures - such as the carbon tax - are a higher priority.

It is currently spending $25 million on promoting the price on pollution.

Meanwhile, the average FHSA account has only a paltry $6328.47 in it, according to the Australian Prudential Regulation Authority.

That's about enough to renovate a kitchen.

I think they are great 18% Co-Contribution is an incredible risk-free return for the patient saver, however most people I have mentioned these accounts to have not taken up the offer because they are perceived as too complicated.

 

[RandR]

I too also think the accounts are great, am just going through the process of setting up one for myself, and the girlfriend. Both achieving 20% plus returns on up to 11000 a year in a bank account is pretty damned hard to pass up. A couple of years of that accumulating and compounding will be moving faster then real estate prices imo over the next 5 years.

We were actually looking at CBA, but now there withdrawing it leaves us between a toss up of ANZ or ME Bank.

Anybody with accounts with either of the providers above have and positive/bad experiences with either ? Were leaning towards ANZ, but only because we've used them before and have not yet dealt with ME bank for anything

 

[Julia]

I've been with ANZ for my base account for all my life and have never once had a problem with them.
Great service from the local branch, call centre is staffed by people who speak Australian English and who are polite and helpful.

Downside is that interest rates can be lower than other institutions for deposits.

 

[danago]

Mr Smith said: "People are largely unaware that the FHSAs exist. It has not been marketed to the public. While they have made changes to the scheme to make it easier, it has not been publicised to the same extent as the First Homeowner's Grant."

This is pretty much what i have observed. I have a FHSA with CBA, and i think it is a great product, especially since i am set on buying a house soon after i graduate from university. More often than not (much more often), whenever it has come up in conversation, people have never heard of the scheme; at first they think i am talking about the first home buyers grant until i explain otherwise.

 

[maffu]

Thanks for that. When I signed up the Commonwealth Bank employee had no idea how quick the government would pay the contribution, and its not in any of the paperwork. I assumed it would be pretty slow.

I lodged my tax return last night, so I will wait and see how long it takes.

I thought I would bump this thread as we near the end of the financial year and I am about to make my second deposit, it gives time for those that were not aware of this product to sign up if it makes sense to them.

To answer my prior point, the Government Co-Contribution was put into my account 3 months after I submitted my tax return.

Deposit: $5000 27/06/2011
Gov: $850 15/11/2011
Accrued Interest: $250
Total: ~$6100 in 1 year so a nice 22% return for the year is excellent. A bit disappointing the interest rates had dropped down to 4.25% during the year.

I also put the cash into my partners account, so we both earned the 22% return.

Is anyone aware of the maximum deposit that can be made this year? I believe it was inflation adjusted so is above $5,500 this year? Will check at the bank if no one is sure.

 

[jono1887]

I thought I would bump this thread as we near the end of the financial year and I am about to make my second deposit, it gives time for those that were not aware of this product to sign up if it makes sense to them.

Seems like all the big banks aren't offering this account anymore. Which bank have you got this account at?

 

[robz7777]

Is anyone aware of the maximum deposit that can be made this year? I believe it was inflation adjusted so is above $5,500 this year? Will check at the bank if no one is sure.

Fairly sure it remains at $5500 this year.. Only gets indexed every $500 so it will be a couple of years before going to $6k..

 

[maffu]

Seems like all the big banks aren't offering this account anymore. Which bank have you got this account at?

I am with Commonwealth, I know they stopped issuing more accounts, but I assume some of the others are still offering the product, unless the Government cancelled on new accounts.

Fairly sure it remains at $5500 this year.. Only gets indexed every $500 so it will be a couple of years before going to $6k..

Thanks for that.

 

[Junior]

I am with Commonwealth, I know they stopped issuing more accounts, but I assume some of the others are still offering the product, unless the Government cancelled on new accounts.



Thanks for that.

Given the latest budget and scaling back of FYOG it wouldn't be surprising if these accounts aren't available any more.

 

[maffu]

Given the latest budget and scaling back of FYOG it wouldn't be surprising if these accounts aren't available any more.

A quick search showed ANZ & Commonwealth have stopped these accounts.

http://www.mebank.com.au/personal/savings_accounts/first_home_saver.html
Me Banks still offer them, although to be honest I have never heard of ME bank.

 

[Jester]

I opened one up with ME bank in December last year and have about 3k in there now, all good so far

 

[maffu]

I rang the ato the other day, trying to find out when they will pay their contribution.

they said
<60 days after u lodge yr tax return they will send the contribution to your bank and then the bank has no longer than 30 days to put the funds into yr acct.

2011:
Tax lodged 21/08/2011
Gov Contribution Received 15/11/2011

86 Days between tax lodgement and receiving government payment.

2012:
Tax Refund Recieved: 21/08/2012 (so I would have lodged a week or two earlier.)
Gov Contribution: Missing In Action.

It's been over a 100 days since my girlfriend and I lodged our tax returns, and we have not received the government contribution. I wonder who is holding it up...
I'm not sure if it is worth speaking to the bank or ATO about, or if it will come through soon.