Are you one of the many Australians who barely gives their superannuation fund statement more than a cursory glance when it arrives? If so, you are not alone.
However, your annual superannuation statement and how your fund is performing is something that you really should be paying more attention to. If you don’t, you may find that you have less money available at retirement than you should have, or you could be paying higher fees than necessary. What’s more, if your super statement is something you don’t really look at, you could miss the important fact that compulsory employer contributions are not being paid.
This is why your annual super statement is not something you should just file away without thinking about it. To help you better understand your statement and what it means, here are some tips for what you should be looking at when it arrives.
What to Look For in Your Super Statement
You should check your superannuation balance regularly, especially as you get closer to retirement age. Every quarter is a good idea. At the same time, you should also ensure that the amount shown on your payslip as being contributed to your fund is the same that is appearing in your super account. Unfortunately, not all employers pay the full amount they are obliged to pay, so you need to check that the sum on your payslips (monthly or annually) and the sum that has been added to your account correspond.
In addition, you should also make sure that you understand how management fees are being applied to your super account, so that you can determine whether these represent value for money. At the same time, you should also endeavour to find out what insurance is available with your fund.
It is also important to understand what sort of performance you can expect from your superannuation fund. As with any investment, this will depend on your approach to risk, so if you opt for a high growth option you are likely to see more fluctuations in your balance, potentially producing both greater rises and larger falls.
It therefore makes sense to regularly review your fund’s asset allocation in order to ensure that it is meeting your needs and expectations.
Using a Self Managed Super Fund to Buy Investment Property
You can go much further with regard to the levels of attention you give to your superannuation fund, and with a Self-Managed Super Fund (SMSF) you can use your superannuation to invest in property.
What is a Self Managed Super Fund?
A Self Managed Super Fund (SMSF) is a fund where you, as a member and trustee, are responsible for choosing where to invest the funds and how the benefits are to be paid out. A SMSF can therefore provide a greater range and choice of investments than a managed industry fund, and can, under certain conditions, be used as the means to purchase an investment property. (as well as residential property, this can also include office or retail spaces).
There are a number of restrictions in place as regards to how you can do this, however, relating to the purpose of a residential property, who can live in it and when, and who you can buy it from.
Managing a SMSF is not a straightforward business, as there are numerous rules and regulations which must be strictly adhered to and you, as both a member and trustee of the fund, are responsible for complying with all the relevant superannuation and tax laws. You are also responsible for having the fund audited every year, maintaining records associated with the SMSF, and lodging an annual return with the ATO. Mismanagement of a SMSF can result in serious penalties.
Therefore, we always recommend that you get professional financial advice from a qualified SMSF advisor, and we can connect you with highly regarded specialists in this field who can advise you on how to set up and operate a SMSF fund.
Managing your SMSF
As part of our range of services for people considering buying an investment property in Australia, we can connect you with SMSF specialists who can advise you on the sums of money required both to set up your SMSF and to cover its annual running costs (such as auditing, tax, legal charges, etc.).
Industry specialists with whom we partner will also help you to ensure that you have the appropriate insurance in place, a vital part of any SMSF, and will assist in the preparation of the fund’s annual auditing and tax return.
In addition, we can assist you in securing a home loan to finalise the purchase of your investment property, which is required to be done under very strict borrowing conditions, known as limited recourse borrowing arrangements (LRBA). This can be a more complex task than securing a regular home loan, and so expert advice is needed.
Some SMSF loans for real estate investing cost more than conventional home loans and so this is why it’s important that you are able to get the best loan at the most competitive rate. Shopping around for the best home loan when buying an investment property through a SMSF is perhaps even more important than for a conventional home loan, and our experience and relationship with the leading Australian lenders means we are well-placed to be able to do this on your behalf.
Find out More About Growing Your Property Portfolio Through a SMSF
At Power of Property, we understand that running a SMSF requires knowledge, expertise and time. That’s why we offer people who want to know how to invest in property using their super advice and guidance in the setting up and management of a SMSF through securing appropriate expert legal and taxation advice.
As highly experienced property strategists, we also offer well researched guidance on the best places in Australia to invest in property, and we work closely with you to build a property portfolio designed specifically to meet your retirement needs.
Call Michael Lawton on 0407 785 560 or Danielle Charlton on 0411 268 795, or book online to arrange a free personal property investment strategy session.