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SMSF research project by ATO

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Happy said:
I can say that too, as Self-Super is prohibitively expensive for your first job and first pay.
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Julia said:
I've never thought it was designed for someone in first job, but for older people who have reasonable asset base and retirement targets.
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Totally agree with both points, a SMSF is the most valuable later in your working life, especially when you're able to move to a transition to retirement pension component, as part of your SMSF (ie. from 55 years).
 
YELNATS said:
Totally agree with both points, a SMSF is the most valuable later in your working life, especially when you're able to move to a transition to retirement pension component, as part of your SMSF (ie. from 55 years).
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It is like you get lower percentage interest rate on smaller term deposit and higher on larger, fantastic for rich people to get richer.
 
Julia said:
Well, once in pension phase there's no tax at all, so it's better to have the funds within the allocated pension than outside of it where you'd be paying tax.
Curious as to why you don't comment on this.
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Julia it's a generalisation that I make. It doesn't apply to everyone because it is dependant upon the amount of funds held within that entity and the skill level of the person involved.

Someone with the appropriate skills may be able to invest the funds in the SMSF once in pension phase that more than makes up the level of drawing through TTR or normal pension. In those circumstances it is much better to have the funds in a nil tax environment - because the funds are still a large income producing asset that is growing at faster than the inflation rate.

It's been my experience however that as people age they become more risk averse and wish to have a guaranteed income stream in their later years and so tend to favour products that produce a guaranteed level of income. The overwhelming proportion of clients in that age bracket do not have the skills, time or inclination to use the tax free nature of the entity to it's full effect. They want to place all the money into cash products and spend time working on their golf swing - and since they've worked their whole lives for the money who can blame them eh?

The unfortunate side effect of this is that many financial advisors use terrible products (like an annuity or certain debt based products) to achieve these guarantees for clients which ends up being significantly value destroying over the longer term. There are easier ways of investing into income producing assets that do not result in a) a level of return below inflation and b) provide a sufficient income but to get appropriate diversification into direct asset classes generally means investing directly into property (which is bloody hard to do inside a super fund if there is not enough cash).

Does that answer your question?

Cheers

Sir O
 

Hi KK,

that was me 2 yrs ago

lots of informative posts from everyone,

fwiw, I have adopted the approach of the low cost efund you mentioned, and also discuss some matters with my personal accountant, for which I pay an hourly fee.

Having good accountancy advice can save on expensive mistakes, if you find one who is good & experienced, in the field of SMSF,tax, and general investment, well worth it.

Legislative risk is a real scare now for younger persons with talk of 67yr access, and other imo, regressive ideas, has made me need to re-evaluate strategy in regards my partners super vs other investments.

You can leverage yr investments in SMSF via CFD, warrant or option if yr deeds allow ( for the present anyway)...or just highly leveraged listed equities

If over 55, pension phase, very low tax, compounding, is hard to beat, in theory.

In practice, if you go alone, it means that you have to:

*have, or acquire investment management skills
*design and implement a plan
*take full responsibility for monitoring and re-evaluating

either that or pay someone a fee to make investment decisions on your behalf, or in conjunction with you, such as a financial planner.

good luck
 
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