Self Managed Superannuation Funds

You’ve got a Self Managed Super Fund (SMSF) or you’re thinking of controlling your own destiny by starting one.  Yes it is a good idea if you can make the right investment decisions to not only increase your wealth but to protect it.

The burning question is ‘do you invest in shares or property?’  The concensus of expert opinion when buying shares is that you should only buy blue chip shares with franked dividends which become tax free once you turn 60 and you are in pension-mode.  The same applies to income received from property investments either residential or commercial.

But how do you make the right decision?

The main difference is you can gear property into your SMSF i.e. if you buy a $1 million property and use $400,000 sitting in your super fund the Trustees of the fund only borrow $600,000. Be careful, every lender has their own rule on how much liquidity you have in your Super fund after consummating the purchase. i.e. the Commonwealth Bank has one of the highest at $200,000. Other banks and non-banks have as little as 10% or nothing.

However you can’t gear up shares in a Self Managed Super Fund.  You can’t control a $1 million bundle of shares with only a $400,000 outlay, but you can in property.

So overall if you believe the gearing philosophy which could equate to additional growth and income then property investments in your SMSF would be the best choice.

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