SMSF Basics – How to know if a Self-Managed Super Fund is for You

SMSF Basics – How to know if a Self-Managed Super Fund is for You

Setting up a Self-Managed Super Fund (SMSF) is a major financial decision. The responsibility rests with you as trustee(s). SMSFs don’t suit everyone, so how do you know if it is for YOU?

It’s important to consider – (tick what you can be confident with):

• What is involved in management  – if you have the time and knowledge and skill to manage and invest;
• What it means to be a trustee – you hold and invest money/assets for the benefit of the members’ retirement, are responsible for running the fund, make decisions that affect the interests of all members, must act in the best interests of the members, act separately from your own affairs, ensure money is accessed when the law allows;
• The assets and money to be viable compared to the costs;
• Ensure it is set up solely to pay retirement benefits to members (Sole Purpose Test);
• Ensure compliance with super laws to be entitled to tax concessions;
• Want the opportunity to actively manage your own super, but understand responsibilities.

See NAT 71923 pg 5 and 22, and 11032 (Aust Tax Office publications – available in PDF by searching HERE

Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know and checklists to determine if SMSF is for you and what steps are needed to set up. It also gives you ALL the Aust Tax Office publications about SMSF (NAT XXXX). Get your copy now – click “Download” top right hand side above. You’ll also get monthly SMSF news, investment teaching and upcoming seminar and workshop briefs! Download your FREE Guide now!

If you have any questions, why not give us a call – it’s FREE also! No obligation.

CASE STUDY – Couple Had an SMSF but Wanted to Learn Share Investing and Spread Their Assets

CASE STUDY – Couple Had an SMSF but Wanted to Learn Share Investing and Spread Their Assets

They came to our introductory seminar Self Managed Super Fund Roadmap (click for latest) to ensure they were updated on the latest with Self-Managed Super Funds (SMSF). They currently owned an SMSF that had been set up from years ago. They had run their own businesses including service and consulting. They had worked hard and always studied to learn how to run their business better and more efficiently, and alongside this, saved as they could for their retirement. Now in retirement, they had a great house with view of the bay in a quieter beach town but close to city freeway access. Impressed with our presentation, they completed the feedback form and indicated interest in coming to the next workshop Navigate your way to Successful Share Investing (click to find latest in list) to learn more. They were taught about the basics of Financial Statements – what is the Profit & Loss, Balance Sheet and Cashflow Statement, how they are constructed and how to read them. They enjoyed looking at the Telstra last Financial Statements and reading them with greater understanding. Then we taught about ratios and how they are used to analyse the financial information of companies. Analysis is used by share investors to understand the figures in more depth and enable us to compare companies to each other and see which is performing better compared to the other. The husband was fairly versed in shares, having invested in shares and attending course himself over the years. In their SMSF, were 6 companies currently. His wife had not had the time to learn about shares over the years, and tended to mention to the husband recommendations by commentators and analyst firms. But he wanted her to understand more – and our Navigate workshop was the perfect place. Without difficult maths or high-level definitions, we show how simple it is to understand the financial statements. We also have attendees actually find some of the basic figures in the statements of Telstra, divide certain ones into other ones (a ratio) and compare the result with generally accepted norms. Actually calculating ratios yourself is unique to our workshop. The key thing is how simple a ratio is – divide one number into another. For example, the Return on Equity ratio (also explained HERE). Take the Return (Profit) for the period, divide it by the Equity in the Balance Sheet. Was it a good result? What would we generally be looking for? Do we compare to others in the industry? Both were delighted with what they learnt. But the tediousness of calculating all those figures!! Yes analysis can be obtained by other data sources and broking firms, etc. Can SuperBenefit help them? Yes – clients get all the ratios in a simple to read comparison chart where ratios are given as well as colour-coded for easier comparison of the top companies. The aim is to get as much green as possible over Financial Heath (a Lincoln Indicator Rating) as well as 12 KEYT ratios and figures. The husband saw this as a great opportunity for him and especially his wife, to expand their knowledge and continue their education in shares. He decided to put a portion of their SMSF with us and our broker. We set up a separate bank account and trading account. In discussion with the broker, a selection of companies was made and investment began. After reviewing the portfolio 6 months later, the couple decided to double their money with us and expanded their holdings recently. The wife wants to invest in property for diversification, so while they are building the capital in stocks, they are investigating where/when they will put some of their super into property. We cover property in our Roadmap seminar – it is to be taken with caution – there are important key steps that must be adhered to, to avoid non-compliance or fines. And affordability is key too – our associate broker can help them know quickly if they are likely to be able to borrow (leverage) to purchase the asset, or whether it will be better to buy outright. These are the exciting next steps for the couple to take soon! What is YOUR story? Want to be more informed? Come to our next seminar - SMSF Roadmap, and/or our workshop to learn about share investing - Navigate to Successful Share Investing. If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above. Tell us or comment bellow, we’d love to hear your views.

News – Is Retirement Getting Cheaper in Some Ways?

 

News – Is Retirement Getting Cheaper in Some Ways?

10 May 20I3 – Bela Moore, Money Management 
Energy and health costs have increased but retirees who seek out a comfortable lifestyle are living cheaper due to a fall in the price of food and leisure goods, according to the latest Association of Superannuation Funds of Australia (ASFA) retirement standard.  However, with a decrease of less than 0.1 per cent between the December and March quarters in aggregate terms, this equated to $1 extra per week and an outlay of $56,317 a year per couple per annum to achieve the comfortable lifestyle.   Decreasing costs stemmed from a fall in the cost of leisure goods and services as well as the strong exchange rate bringing down the cost of overseas holidays and items such as computers and televisions. Writes Bela Moore at Money Management.

READ MORE about items that have increased and those that have decreased.

What is your experience? – Give your vote here!

Interested to know what self-managed super (SMSF) is all about, and if it is for you? We have FREE seminars and bonuses every month – Self Managed Super fund Roadmap (all you need to know) see SEMINARS or go straight to our EVENTS for more info.

MASTERCLASS Investment – Ratio Analysis – What is it, where is the data, how to use the ratios?

MASTERCLASS Investment
Ratio Analysis
What is it, where is the data, how use the ratios?

 

In our Masterclass we explore ratio analysis of companies/stocks, including what it is, what data we need and how to use the ratios.

What is Ratio Analysis?

Ratio analysis involves comparing different numbers from the balance sheet, income statement and cash flow statement. It’s most effective when comparing these numbers against previous years, other companies and the industry while bearing in mind the economy in general. Ratios look at the relationships between individual values and relate them to how a company has performed in the past, which may indicate how it might perform in the future.
As an example, current assets alone don’t tell us a whole lot, but when we divide them with current liabilities we get an indication of whether the company has enough money to cover short-term debts.
In this class, we’ll show you how to use ratio analysis to analyse financial reports and get an insight into companies by comparing these ratios against previous years, other companies and industry averages to see how they can tell you a lot about where a company might be headed. Evaluating a company is no easy task, so let us help shed some light on how it can be done and, ultimately, help you to make more informed choices as an investor.

Where is the Data?

There are several different places you can find the latest financial figures for a particular company. Finding financial reports is easier than ever thanks to the Internet, here are some sources:

• Company Websites - Most public companies have a website or investor relations department. For the most current half year (Aust) quarterly (USA) or annual report you find them on their websites and also look for their investor relations sections;
• Australian Stock Exchange (ASX)(Aust) – Have their offices in major cities Melb, Syd etc, and also their website http://asx.com.au/ there are Free member offers announcements, education, company search, market statistics and more. The company search is also invaluable -http://www.asx.com.au/research/company-research.htm;
• Securities and Exchange Commission (SEC) (USA) – The information posted in the electronic gathering, analysis and retrieval (EDGAR) database includes the annual report (known as the 10-K), quarterly report (10-Q), and a myriad of other forms that contain every type of financial data;
• Yahoo! Finance - A great resource for many individual investors, Yahoo! Finance is great for financial news, and lays out ratios and performance data for individual companies;
• Trading room in Aust http://www.tradingroom.com.au/apps/index.ac  - Is a great site for company info, charts; some basic analysis as well as market info and current intra-day news.

How to Create and Use the Ratios

There are 70-90 or more possible ratios. A ratio is simply taking one number from a financial statement and dividing another number into it. Quite simple, no complicated maths. Over time a core dozen or so ratios have been considered essential and some are (click names to learn about them)

Debt to Equity

Current Ratio – one sign of business health

Price to earnings

ROE – Return on Equity – also see Why avoid companies with low ROE

ROA – Return on Assets

Want to learn the core issues of share investing? Our workshop “Navigate to Successful Share Investing” gives a 2 & 1/2 hour practical session to easily understand Company Financial Statements, learn how to find healthy companies, what tools and ratios to use and do examples, and also includes how to get better investment outcomes. Other Bonuses as well. Check for the next one HERE.

Interested to know what self-managed super (SMSF) is all about, and if it is for you? We have FREE seminars and bonuses every month – Self Managed Super fund Roadmap (all you need to know) see SEMINARS or go straight to our EVENTS for more info.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – All about Self-Managed Super and You – top right hand side above.

Basics About Super – What is Superannuation in Australia?

Basics About Super – What is Superannuation in Australia?

Superannuation is a long-term savings program for retirement introduced by the Government to provide income to individuals in their retirement, because we have an ageing population which means more will be non-working than are working, and Government pensions will not be possible in the future.

Mostly your employer contributes money (based on currently 9% of your current wage/salary).

In Australia, superannuation investments receive special tax concessions (a low 15%, and Capital Gains reductions) that aren’t available to other types of investments. This makes super a powerful vehicle to save for retirement.

Your super is likely to be one of your biggest assets in retirement, and the choices you make today can have significant impact on your lifestyle in your retirement.

Since the federal government introduced choice of superannuation fund legislation on 1 July 2005, you have even more options about where your super can be paid (for investing and tax concessions). It must be in a  registered fund to obtain the special concessions.

One form of super – Self-Managed Super Fund (SMSF) may be suitable for some – is it you? Call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above, or CLICK THIS.

Deadline Approaching – Find your Lost Super in the $887 million of Unclaimed Super Accounts

 

Deadline Approaching – Find your Lost Super in the $887 million of Unclaimed Super Accounts

Are you considering superannuation to be tomorrow’s problem, because there are many ways to boost the size of your nest egg today, including super you may have “lost”.  As part of a raft of recent reforms, super funds must transfer “lost” or inactive accounts of up to $2000 to the ATO by May 31 if they have been unable to contact the account holder or the account has been inactive for 12 months. It will not be impossible for account holders to access their funds after the May deadline, it will be harder and the accounts will only earn interest at an uncompetitive rate based on the CPI. The tax office says there are 3.4 million lost super accounts worth $16.8 billion in the system and more than 2.8 million unclaimed accounts valued at $887 million.

Sophie Elsworth, in The Advertiser [also appeared in The Daily Telegraph] writes - 
“Unless you’re heading towards retirement or a decade or two away from it, you’re probably avoiding looking at your super. In fact, you’ll groan at the thought of it. There’s no better time than now to do what many of us will put on the “to-do” list but never quite get there a superannuation check-up.  Your Money has asked the experts how you check on the wellbeing of your retirement nest egg. There are more than 3.4 million “lost” super accounts totalling $16.8 billion and more than 2.8 million “unclaimed” super accounts worth $887 million in Australia.  Untouched super accounts are already being transferred across to the ATO and all will be moved over by May 31, so now is the time to get your money.”
READ MORE

Call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above, or CLICK THIS.

Masterclass – SMSF – Being and Changing Trustee – When and How

SMSF – Being and Changing Trustee – When and How

All self-managed super fund (SMSF) members must be trustees of the fund and all trustees must be members, however there are some exceptions such as:

• Minors, being too ill or old, mental incapacity or travel overseas for an extended period, they can become (or remain) a member of an SMSF if another person is appointed to act as trustee on their behalf;
• If a fund member dies, their legal personal representative (LPR) will normally act on their behalf until a decision has been made to make a death benefit payable; and
• If a person becomes the last remaining fund member, they can keep the fund running if another person is appointed as trustee or implements other solutions.

All members of an SMSF should be aware that failing to meet the trustee rules and requirements could render the fund non-compliant.

Notes for some specific situations and solutions:
Minors
Minors are not able to be SMSF trustees because they are classed as being “under a legal disability” and are not permitted to enter into contracts, but can be a member of an SMSF if a parent (who may also be a member of the fund), a guardian or a LPR is prepared to act as trustee on their behalf. Once the minor reaches the age of 18, the parent, guardian, or LPR must resign as trustee and the minor is then appointed as trustee if they want to remain a member.

Mental Incapacity
Having a mental incapacity is also considered to be under a legal disability and means a person cannot be an SMSF trustee, but they can be an SMSF member if a person who holds an enduring power of attorney (EPOA) is appointed to act as trustee on their behalf.
Situations where a trustee becomes mentally incapacitated without an EPOA can be problematic.
An eligible person(s) eg family member, needs to be court-appointed to act on that person’s behalf (ie, become the person’s LPR) and then are they able to become trustee of the SMSF in place of the disabled member.

Members Going Overseas for an Extended Period
Be careful if a fund member plans to go overseas permanently and in some cases, even temporarily, as the Australian Tax Office (ATO) may deem that the ‘central management and control’ of the fund has not remained in Australia and the fund will not meet the definitions of ‘resident Australian superannuation fund’ and will lose access to the tax concessions. The solution is to appoint an EPOA to a resident of Australia, or rolling over the departing member’s benefits to a public offer fund or converting the fund to a small Australian Prudential Regulation Authority (APRA) fund (SAF).

Older Members
In time a member of an SMSF will age and/or suffer from some sort of illness that will impact their ability for continuing to act as trustee or a director of a corporate trustee of their SMSF. Some actions are – they have a choice of winding up the SMSF, or choosing to continue to run the SMSF by appointing a LPR who holds an EPOA on their behalf to take their place as trustee of the SMSF.

Deceased Members
When a member dies, they are no longer a trustee of the SMSF and an LPR will act as trustee until a death benefit can be paid.
The Trust Deed rules become the guide and may allow the remaining trustee/member to appoint someone else to act as trustee until a decision has been made to make a death benefit payable. Binding Death Nominations can assist with directing benefits as per the member’s wishes but to be valid, the nomination must also be consistent with the requirements set out in the trust deed rules.
The person appointed as trustee for the deceased member remains in this role until a decision has been made to make a death benefit payable, either in part or in full, and then usually they step down from trustee
Also note that if a part payment is made, the person must step down as trustee when a decision has been made to pay a death benefit, and the subsequent payments are determined by the remaining trustee(s).

Becoming a Single Member Fund
If a fund that has two or more (but less than five) members it will eventually become a single-member fund and then that member can appoint a second trustee to the fund. They do not have to be or become a member of the fund as well, and cannot be an employee of the remaining SMSF member (unless a relative). Alternatively, the fund could appoint a corporate trustee, and meet certain other conditions.

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above, or CLICK THIS.

Uncertainty is the Enemy of Long-Term Savings – Brad Cooper of BT Financial Group

 

Uncertainty is the Enemy
of Long-Term Savings

The intense debate over changes to Australia’s $1.5 trillion superannuation system should serve as a clear indication to both sides of politics that super should not be up for grabs, the chief executive of Westpac-owned BT Financial Group said on Friday. In an address to an American Chamber of Commerce luncheon in Sydney, Brad Cooper spoke about the future of superannuation, specifically its purpose, engagement and importance.

“Uncertainty is the enemy of long-term savings,” Cooper said. “I believe that if the discussions of a few weeks ago made anything clear to all sides of politics, it was that super should not be up for grabs.” Reported on 22 April 2013 by Kate Kachor in Financial Observer READ MORE HERE

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