The Self Managed Super Fund -
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The Trident Press Self Managed
Super Fund Guide is Australia's most up to date and comprehensive guide to Self
Managed Superannuation.
Updated to
take into account changes due to come into effect in 2008/9
The Trident Press Self
Managed Super Fund Guide will show you:
-
Exactly how to set
up your own fund cheaply and efficiently
-
How to ensure you
get the maximum benefit for your retirement
-
How to reduce your
tax to the absolute minimum
-
How to manage your
own fund
-
Where to invest for
the best returns
-
How to understand
Self Managed Super and keep you up to date with all the law changes
-
All the traps and
pitfalls many people encounter when it comes to Superannuation and how to
avoid them
-
Plus much more
If you want a
stress free retirement, The Trident Press Self Managed Super Guide is essential
reading.
A
little about Superannuation in Australia and why you should be very concerned
about your future
Compulsory superannuation has been
with us in Australia since it was introduced in 1992. When it was introduced, it
was mandatory for your employer to set aside a percentage of your wages or
salary into an approved superannuation fund.
The reason this was done was due to an ageing
population and a future burden on government to provide us with an old aged
pension. Obviously they have done their numbers and worked out that the
government simply can’t afford it. So, they have forced your employer to afford
it!
The statistics are alarming. For every 4 people
working, there is one person on the pension. However, they have calculated that
by 2010, there will be less than two people working for every person on the
pension. This is a little scary if everybody of pension age decided to stop
working and apply for the pension. Of course this won’t happen, also many
pensioners are self sufficient, so we are not facing an economic crisis…….. yet.
Hence, the government brought in compulsory super to avoid future problems.
It was a great idea, and it has worked well in
many countries to alleviate future costs to the government, it brought with it
two significant problems:
Problem 1 – The contribution
level was never going to allow people to retire independently and comfortably.
While the 9% of salary contributions seems generous, after 20 years or so of
contributions (depending when you started work of course), you find yourself
with barely enough money to survive unless you are drawing down capital as well
as the income from investments. But more about this later.
Problem 2 – Superannuation Fund
Managers Gouge so many fees that your Net Earnings Decrease not Increase.
This issue has been given much publicity. Fund managers have been charging such
exorbitant fees that whatever you make from the increases in the value of your
fund (or earnings) are eaten away by fees. Why? Because fund managers do two
things, generally. They charge their fees on the basis of a percentage of the
fund’s assets rather than as a percentage of the profits made, (This is not the
case with a few funds, however). This then provides no incentive for them to
perform, so they don’t! You then find you are virtually earning nothing on your
money or worse, your money is slowly disappearing. How many times have we heard
of people contributing to their super fund only to find that all the money is
gone at retirement time. I know…… I have a small amount in a fund and I have
watch that erode to next to nothing. It had $.5,000
in it 10 years ago, and now it’s $.1,700. The
reason? The fund managers have “stolen” the money! “Stolen”……. Seems a little
harsh? No, what do you call it when someone promises to do a capable job for you
and then completely stuffs it up due to lack of interest or incompetence, and
then still charges full price for their “service”. In my book, that’s stealing.
Of course, then the government has a go, at the rate of either 15% or 30%
depending on how much you are penalised, sorry I meant to say “taxed”.
Now, as I mentioned before, Problem 1- The
contribution level was never going to allow people to retire independently and
comfortably. This is a disaster for many people.
Think about this……….. You contribute say 9% of
your salary, for example $.50,000 x 9% = $.4,500
contribution. This means the government takes 15% and leaves you with $.3,825
to go into your fund. The fund then charges you around 2% of this amount as
their fee leaving you with $.3,748 (and some charge
much more).
I should
also point out that the many funds also charge a further 2-6% on top of this
again a “entry or load fee”. If you are in a fund that does this you will
retire on almost nothing as your fund will be slowly eaten away. Your total
contributions will be less than your payout, by a long way…………. These funds
are out of control, some of them anyway.
Now, based on an average of fund returns in
Australia you can expect to earn around 6% based on a three to five year return
(source: “The Top Ten Equity Superannuation Funds in Australia – Money
Magazine). This 6% is then reduced to 5% because the government takes its
contribution here as well. This leaves you with a 5% return on your money less
the fund taking 2% which gives you around 3% net return.
Are you excited about your 3% return ………….. well,
calm down I have some bad news….. that is the current inflation rate! This means
you are earning …….. NOTHING!
The only thing you will be retiring on is the
money you put in…. and that’s if you put it in one of the Top Ten Funds. Feeling
ill about your future yet? You should be!
Let’s take this one step further: You put $.3,748
away each year (let’s forget about growth of this amount as we know it’s eaten
away by inflation, so the end number we come up with will relate to current day
dollars, which is good)
You put money away for 25 years until you retire
which gives you $.94,000 give or take. Now, you
invest that $.94,000 at 6% and you will earn $.5,640
which means you are living on around $.100 a week.
You were earning $.1,000 a week when you were
working.
Can you live on
a 90% pay cut?
Ok, just say you get lots of pay rises,
promotions etc and during the period of you employment your pay doubled as did
you contributions……….. you’re now up to $.150 a
week. This assumes your last salary before retirement was $.150,000,
but then you would have been paying 30% contribution tax to the government as
once you get over $.103,507 you pay 30%, so you
would not even get $.150 a week.
Worried Yet?
You should be!
The Secret to
Retirement Success is…………….
Not how much you earn. It’s what you fund earns,
it’s income less tax and fees (if applicable).
For example:
If you had invested in one of my favourite
funds, XXXXXXX(This Fund is revealed in the Guide). This has a three to
five return of around 24% (net to investor) per annum, but say it only returned
a more moderate rate of 15% per annum and that you set up your own super fund.
You will retire on $.372,350
on a salary of only $.50,000 after 25 years and
taking inflation and contribution tax into account. Yes, we have taken off the
15% tax, we have reduced the amount to take inflation into account by 3% per
year and the manager has been paid on performance
Your income now in retirement is (after investing
it on the same basis as we did before, at 6%) $.22,341
or $.430 per week. While still inadequate in my
opinion, it’s made a big difference ……….. $.100 per
week or $.430 per week , what would you prefer?
What is
different?
our
Salary is the same
Your Contribution is the same
Your Tax is the same
Your Inflation Rate is the same
Where and How you Invest is Different!
That’s all it
took……………. Where and How you invest is Different. Your return on Investment is
the secret.
Now, if you had
your own Self Managed Super Fund all this is possible.
This Guide will explain
in an easy to read and follow way, the reasons why you should have a Self
Managed Super Fund, how to set it up yourself or use one of our recommended
agents, manage it yourself and keep on top of the regulations. The Self Managed
Super Fund is one of the most valuable tools available for creating wealth.
This Guide will answer every
question you have ever had in a simple and concise way... we also show you a few
techniques and
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