Superannuation, the ultimate government cash cow?

qldfrog said:

Guy get $20k out and can afford to buy a house instead of renting, get surgery on that knee or get that degree to a better income....
No "one fits all "case.
And if these guys are loosers, well 20k will not make a difference as on the day of retirement, they will be straight to pension: super or not .
And remember
My first super account as a younger would me during the first 5y did just break even at a time when term deposits were at 8% a year.....
Thanks suncorp and myriads of useless covers

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True, everyone’s different with different needs. Just looking at the numbers in super. Obviously if there’s a pressing need then one would take the money out. However one persons want is another’s want.
Fortunately my younger 23 year old realised not to trust fund managers, advisors and super funds, and did it all myself. Several mistakes, but more good choices than bad.

Gunnerguy said:

True, everyone’s different with different needs. Just looking at the numbers in super. Obviously if there’s a pressing need then one would take the money out. However one persons want is another’s want.
Fortunately my younger 23 year old realised not to trust fund managers, advisors and super funds, and did it all myself. Several mistakes, but more good choices than bad.

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I meant to say ‘one persons want is another’s need’
?

Gunnerguy said:

I meant to say ‘one persons want is another’s need’
?

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Ok,true but there are also basic needs.

For the people who need a flashy car , bigger screen etc super at retirement is the least of their or the gov problem and on retirement day super will never be enough to cover the various debts and pay the balance on the camping car or round the world trip...
And that's if they even reach it.was even tempted to withdrawn mine but could not qualify..and i stick to rules/laws

Aussies' $3 Trillion wealth tied up in superannuation is about equal to what they have in the sharemarket.
Another $ 1 Trillion is invested in commercial real estate and for the big one,residential real estate,the magic number ,dwarfing everything else is... $8 Trillion.
Let's hope they all never need liquidity in a hurry.

Liquidity for what?

It's a tangible asset, just borrow against it.

over9k said:

Liquidity for what?

It's a tangible asset, just borrow against it.

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You can only borrow against it if you have ‘income’, unfortunately.
GG

Not necessarily - depends on who you borrow from, the loan conditions etc etc. What is a bridging loan if not a loan you couldn't cover with income but possible because it's secured against some form of equity you have in something? They're expensive precisely for that reason, but they exist.

You also don't need to borrow against the whole thing either - you might only need to borrow a tenth of your equity, which would make the lender much more comfortable/willing to loan the money.

over9k said:

Not necessarily - depends on who you borrow from, the loan conditions etc etc. What is a bridging loan if not a loan you couldn't cover with income but possible because it's secured against some form of equity you have in something? They're expensive precisely for that reason, but they exist.

You also don't need to borrow against the whole thing either - you might only need to borrow a tenth of your equity, which would make the lender much more comfortable/willing to loan the money.

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Over9k
I would be very interested in knowing what lenders you know that will allow borrowing against no wage income.
I have only looked at about 10 in the last 6 months and none have been interested in lending to someone with no ‘wage’ income. As an aside, I’m not looking for margin lending against a portfolio of assets.
Feel free to message me directly.
GG

I guess it depends on your circumstances gunner, I mean, reverse mortgages are a loan against an asset no?

What would you describe a bridging loan or a reverse mortgage as if not a loan that cannot be paid off by wage income but secured against an asset?

over9k said:

I guess it depends on your circumstances gunner, I mean, reverse mortgages are a loan against an asset no?

What would you describe a bridging loan or a reverse mortgage as if not a loan that cannot be paid off by wage income but secured against an asset?

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Over9k
Yes I agree, reverse mortgages are available. I stand corrected, however I don’t want to contractually reduce my equity in my assets to a bank upon my demise/death.
For me, however, at my young age, and retired, I prefer to take a loan on my propert(ies) (LVR at 20%)and use the cash for something more profitable, investing for example, and not turning over my propertie(s) future to the bank.

I have been lucky/fortunate that over the past 30 years my portfolio has performed better than the FTSE/ASX/Mortgage rates and am just looking for some cream on the cake.

Currently looking at options trading but really looking for a company that will provide a loan to someone without a ‘wage’.

GG




GG

So if I've understood you correctly gunner, you want to borrow against your assets at X% interest rate, invest the money, and hopefully make >X% return investing it, repaying the loan and then pocketing or reinvesting the difference?

over9k said:

So if I've understood you correctly gunner, you want to borrow against your assets at X% interest rate, invest the money, and hopefully make >X% return investing it, repaying the loan and then pocketing or reinvesting the difference?

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Over9k
Yep that’s correct.
For example, if I had $5M in debt free assets and wages can I get a loan?
GG

It's really hard to make a suggestion as to what to look into without knowing your personal circumstances (and I understand if you don't want to post them on a public forum).

With that being said:

I don't know what assets you own but it sounds like you're effectively looking for an unwindable reverse-mortgage - one where you can keep the house/asset if you repay them whatever outstanding principle you borrowed but at X% interest and/or with Y fees. These DO exist. In fact I think most of them have some kind of unwinding clause where if a normal person were to for argument's sake win the lottery they can pay everything back (with interest and fees obviously) and close the whole thing out/keep their house.

But the thing is dude, lenders are not stupid. They are going to get their pound of flesh off you somehow. The interest rate(s), conditions etc are NOT going to be favourable. Even regular loans often have absurd fees for early closeout to make up some of the difference in interest the bank doesn't make off you if you pay it off earlier, hence why you hear about all those examples of people gaming systems by putting hundreds of thousands of dollars in offset accounts but not closing the loan out etc etc. Some of them just flatly do not allow you to make extra repayments at ALL.

So, well, like I said, these are not stupid people. The loan conditions will ensure that they get their pound of flesh no matter what you do. Reverse mortgage interest rates are already quite high and if the (in this case) reverse mortgage is unwindable it will NOT be cheap to do so (think FEES) as allowing you to do so means they forfeit the large amount of interest they would have otherwise made off you.

Point is, you're not going to just borrow money at rock bottom rates/for almost nothing, pump it into the stock market, and skim the difference. They are NOT going to let you do that. You'll be able to borrow money, but it'll come at a pretty serious cost/with some pretty nasty conditions and thus risk for you and even if you manage to eliminate your risk in one part of the loan structure then they'll just get you in a different bit. They WILL rinse you one way or another.

I'm not trying to dissuade you, but I'm trying to dissuade you. I don't know your personal circumstances but it sounds like you're really playing with fire here man.

dyna said:

Opposition Treasurer,Jim Chalmers says the pandemic should never have been used as an excuse to enable people(misguided by the Libs?) to withdraw up to $20,000 out of their super.The unit prices of nearly all of the big Industry funds and the not for profits have now recovered from the March 2020 Covid crash. Those lunatic liberal back benchers were no doubt pleased to see the 20 grand ploughed back into the struggling economy,but the hapless punter is never going to catch up on their lost investment.

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Some people really needed it though! Maybe better rules before access though....but it was a panic.
You have to assume a certain amount of caveat emptor, people shouldn't be treated as pre-schoolers (though I admit some act like they are).

the government should be reminded from time to time that super is actually owned by the workers and is fully paid by the workers even if many people still believe after all these years it is paid by the employers.That money is paid to you by the employer then redirected to feed the pigs in the trough and this whatever your situation.
People doing part time jobs and taking personal loan to repair a car or pay an electricity bill, or just drawing on their credit card for these purposes are still giving away 10% [or nearly] of their income :as tax would not be relevant in this situation.
Mandatory super is a shame
I wish the left was not so in bed with the unions and the cash flow from the super funds to actually wake people up;
Pension should be universal, taxable (so if you are (really) rich, you would probably not gain much and everyone should be free to be responsible for their actiosn.but hey that is a far right naughty capitalistic thought it seems,

qldfrog said:

the government should be reminded from time to time that super is actually owned by the workers and is fully paid by the workers even if many people still believe after all these years it is paid by the employers.That money is paid to you by the employer then redirected to feed the pigs in the trough and this whatever your situation.
People doing part time jobs and taking personal loan to repair a car or pay an electricity bill, or just drawing on their credit card for these purposes are still giving away 10% [or nearly] of their income :as tax would not be relevant in this situation.
Mandatory super is a shame
I wish the left was not so in bed with the unions and the cash flow from the super funds to actually wake people up;
Pension should be universal, taxable (so if you are (really) rich, you would probably not gain much and everyone should be free to be responsible for their actiosn.but hey that is a far right naughty capitalistic thought it seems,

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It has some good capitalistic effects though. Forced investment allows the funds to invest in long term infrastructure here and abroad, improving the state of the nation.
But yea, generally agree.

Knobby22 said:

It has some good capitalistic effects though. Forced investment allows the funds to invest in long term infrastructure here and abroad, improving the state of the nation.
But yea, generally agree.

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Yes, stability of capital, private investment funds, etc but I believe you could get a better outcome by creating kind of infrastructures bonds with a slight tax advantage or just proper returns.
Forcing a 25y old waiter to put nearly 10pc of their income into what will be a so called growth fund, subject to the next crash while paying credit cards debt is in my opinion criminal.
Yet seems accepted with the leftist idea undertone: let the employer pay for the waiter retirement, and obviously the nanny state ideal.we care for you,do not think,just watch TV/FB.
Anyway, i would not be a popular PM: like truth too much

The 3 million workers who partook of the Liberal government's "Early Access To Your Super" scheme, sadly sold out at the worst possible time ,from the 20th April,last year,with the ASX trading 25% below its pre pandemic peak.
According to (left-leaning) Mckell Institute, that $36.4 Billion would now be worth $41.1 Billion."And that loss only compounds over time" says Mckell's executive director.

dyna said:

The 3 million workers who partook of the Liberal government's "Early Access To Your Super" scheme, sadly sold out at the worst possible time ,from the 20th April,last year,with the ASX trading 25% below its pre pandemic peak.
According to (left-leaning) Mckell Institute, that $36.4 Billion would now be worth $41.1 Billion."And that loss only compounds over time" says Mckell's executive director.

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I guess for those, who it saved from losing their house or car, the fact they might have less when they finally can get their super, didn't come into it.
That $36.4 billion would now be worth $41.1 billion, that the person still can't get hold of, meanwhile houses still outstrip wages.
Luckily the person who didn't withdraw any money, in all likely hood will have more money than those who did, therefore can probably have a better chance of funding their own retirement with the extra savings.
Just saying, it isn't as black and white as some would like to paint it, if super and the rules around super were cast in stone super is a no brainer.
But they aren't and as the saying goes, don't use historical data, as a guide to what you will be entitled to in the end. ?

qldfrog said:

Forcing a 25y old waiter to put nearly 10pc of their income into what will be a so called growth fund, subject to the next crash while paying credit cards debt is in my opinion criminal.

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and yet... from 16 to 23 years old, my daughter worked at a waitress. These SG slips started turning up; dribbles of $20 here, $30 there.. So what did we do?

Apart from the obvious one of consolidating accounts, because there was no default apart from the whim of the owner, every year I dropped $1000 in her fund as a co-contribution. Government matched it, $1500 for a few years, then $1000 then (too good to be true) dropping to $500. When she finished uni and entered the fulltime workforce, she had a balance of $56K for the 8 years of effort (and my 8 Grand). And now, she's still under 35, the balance is close to $300K.

(no she doesn't have a credit card debt; just bought a house to follow from the modest apartment she initially purchased)