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Super - June 30th - Impact on market?

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Pommiegranite

Pommiegranite

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Hi all :) ,

Great forum..glad I found it.

The media (rightly or wrongly) is giving the impression that with the $1,000,000 June 30th deadline looming, a lot of baby boomers are ploughing in as much cash as possible into their superfunds.

Just wondering how much you attribute the ASX's perfromance, this tax year, to these investments in Super.

AND

on July 1st, what are the expectations for a withdrawal of these cash investments, thereby resulting a market fall ?

PG
 
Pommiegranite said:
Hi all :) ,

Great forum..glad I found it.

The media (rightly or wrongly) is giving the impression that with the $1,000,000 June 30th deadline looming, a lot of baby boomers are ploughing in as much cash as possible into their superfunds.

Just wondering how much you attribute the ASX's perfromance, this tax year, to these investments in Super.

AND

on July 1st, what are the expectations for a withdrawal of these cash investments, thereby resulting a market fall ?

PG
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Not sure why anyone who has put available funds into super is then going to withdraw on July 1st?
Also, I doubt that there are all that many Australians with a few spare million floating around that they are looking for a home for if frequently published figures on savings/super are any guide.
 
Julia said:
Not sure why anyone who has put available funds into super is then going to withdraw on July 1st?
Also, I doubt that there are all that many Australians with a few spare million floating around that they are looking for a home for if frequently published figures on savings/super are any guide.
Click to expand...

I'm writing millions in loans per day of people sucking the equity of of the family home and putting the funds into super. It seems almost every financial adviser is pushing the barrow very hard.
 
Mofra said:
I'm writing millions in loans per day of people sucking the equity of of the family home and putting the funds into super. It seems almost every financial adviser is pushing the barrow very hard.
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Heavens, I'm surprised. How interesting. What interest rate are they paying on the loans?
 
Mofra said:
I'm writing millions in loans per day of people sucking the equity of of the family home and putting the funds into super. It seems almost every financial adviser is pushing the barrow very hard.
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Why are people so stupid. If you've got equity in the house, keep it in the house and pay off the Mortgage as quick as possible.

The key in the next few years, will be to minimise ones exposure to debt.

What the financial advisor should be advising people is to get out of debt pronto, not get into more debt. They will do this once everyone is left holding a rotten egg.

What happens when the ASX tanks or when all those Mortgage backed Bonds become worthless

There is a whole industry devoted to scamming people out of the equity in their homes and the money in their super. This whole industry reminds me of Westpoint and FinCorp, but on an Industry level.
 
I cant believe that people are mortgaging their homes just to put money into Super:eek: The interest they are paying is not tax deductible, and will come straight out of their pocket, with no personal tax relief. While this strategy was touted some time ago, furtunately others have no come out and said that is is rarely of benefit to go into debt in order to put this magical million in the Super Fund! This debt is a bad debt, not an investment related one so no negative gearing applies!

And the whole point of putting it into Super is the tax treatment that people receive from it - ie no CGT nor 15% tax. So you dont put it in by June 30, only to take it out on July 1, assuming you are 60 of course.

Do people think they receive a taxation deduction if they put money into Super? Unless it is salary sacrifice, then there are no individual taxation benefits.
 
Scenario 1 - extra super inflows before June 30 stokes the bull even more, then after cut-of back to 'normal' bull market.
Scenario 2 - same as 1 except some people who have been waiting for the chance to withdraw tax free do so and market flatlines
Scenario 3 - the US starts to tank, people start to do swaps to cash, fund managers start selling stock to cover, market goes down, more people swap or withdraw. If it (a US initiated panic/correction) aligns with the tax free withdrawal date then we could possibly have a big drawdown in our market too & end of the bull.

A lot of eggs in this super basket :eek:
 
My guess would be your Scenario 1. although I'm playing cautious, more and more are jumping onto the Uranium bandwagon and the momentum isn't stopping due to huge demand for energy.
 
Julia said:
Not sure why anyone who has put available funds into super is then going to withdraw on July 1st?
Also, I doubt that there are all that many Australians with a few spare million floating around that they are looking for a home for if frequently published figures on savings/super are any guide.
Click to expand...

That's correct Julia. Having your "millions" in super makes a whole heap of sense. Why would you withdraw and pay tax at marginal rates. ONce you turn 60 and start drawing a pension - the earnings on the superfund becomes tax free. It doesn't make sense to withdraw it all. In my opinion there will certainly be a big slow down in relation to the money being pushed into super but their may not be a huge push to get money out of super (and in turn the markets).

As far as people with spare millions lying around - yes you are right. There are not too many people with cash accounts of that magnitude and those that do are fairly conservate and wouldn't put money into superannuation anyway. More common are those people that have property and financial investment assets (in theeir own name) and are wanting to convert them to superannuation assets. Sure - they endure some short term capital gains/stamp duty and legal expense pain but if you can roll $900,000 worth of assets out of an individuals name and into the super fund - it's a great tax strategy.

In relation to the loans - I know that it has been an aggressive strategy recommended by financial advisers but I haven't seen it taken up as a common strategy - mainly due to to the reasons mentioned before. What I don't have a problem with is lending for bridging finance purposes. What you need to remeber is that there hasn't been a great deal of lead time relating to this piece of legislation and accountants/taxpayers and financial planners have probably been a little slow off the mark. In some cases it may take months for legal paperwork to take place relating to property sales and transfers etc. The $1M has to be in by 30 June - therefore loans are being organised to cover the contribution to take the pressure off. As far as mortgaging the family house to contribute $1M as a long term strategy - I haven't heard of anyone doing that - that's crazy stuff.

Regards

Duckman
 
Advisers getting clients to take out loans on the equity of the home does not sound very ethical.
 
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