NEWS – More trustees are seeking advice and looking for mentors – Are you aware what SuperBenefit offers?

NEWS – More trustees are seeking advice and looking for mentors – Are you aware what SuperBenefit offers?

More trustees are seeking advice and looking for mentors – Are you aware what SuperBenefit offers?

Do you use others for advice with your SMSF decisions? A recent survey shows that more are, and they are looking for mentors and relationships (just as SuperBenefit provides) –

A survey that reveals self-managed super fund trustees are more likely to seek help highlights future opportunities for small businesses, according to the association behind a new report.

Released yesterday, the  Intimate with Self-Managed Superannuation report, prepared for nabtrade and the SMSF Association by Core Data, reveals a trend towards a new breed of SMSF trustees who are more open to advice when it comes to managing their funds.

It follows recent reports showing a trend towards small business owners choosing SMSFs because they wanted more control over their future.

The report describes three types of SMSF trustees and labels them ‘controllers’, ‘coach-seekers’ and ‘outsourcers’ based on their willingness to seek outside help.

It found controllers comprise around 39% of trustees and outsourcers make up 15%, while the biggest segment was coach-seekers at 46%.

SMSF Association chief executive Andrea Slattery said the findings represent a change in the behaviour of SMSF trustees.

“The early movers in SMSFs were the controllers, who largely took up SMSFs as a DIY alternative to the APRA fund sector in search of greater control and flexibility,” Slattery said.

“While controllers continue to be the biggest drivers for SMSF establishment, coach-seekers and outsourcer trustees now present the biggest growth opportunity for financial advisors given their amenability to financial advice and recognition of the viability of the vehicle as an advised proposition.”

…. “What we’re seeing is as businesses are changing, people are becoming more confident and more engaged in professional services and advice and changing their business models at a more specialist level,” she says.

Slattery says while the report recognises trustees that are controllers are still interested in information, the new form of trustees coming in are “really wanting to have mentoring relationship, seeking to have people to learn and grow with them”. Renee Thompson writes further at Smart Company

This is the mentoring and support relationship that SuperBenefit provides – call for a FREE chat about how we may help you.

And Kate Cowling writes at Smart Investor

Self-managed super fund investors are increasingly handing over the reins to advisers in the midst of low cash rates and barriers to other defensive asset classes, a report shows.

Despite the name “DIY investors”, a growing cohort are relinquishing the control element – which was heavily marketed as a key tenet of self-managed super funds.

They are outsourcing part or all of the investment decision-making to professionals, such as financial planners and accountants, showed research by the SMSF Association and nabtrade.

The proportion of funds outsourcing investments has more than doubled from 7.3 per cent in 2012 to 15 per cent in 2014, the research showed.

Meanwhile, those after advice from advisers on how to invest dropped from 54 per cent to 46 per cent.

The segment of self-managed fund investors who made their investment decision alone remained fairly static at just below 40 per cent.

Most selfies still followed their own research in deciding how to invest, but the trend over three years showed the appetite for advice was rising. In 2012, more than 61 per cent made their own calls on asset allocation. That number now sat at 51 per cent.

On the advice side, 39 per cent said they decided on asset allocation based on advice from advisers last year, compared with 30 per cent in 2012. Part of the reason for the shift was the desire for advice on how to invest when cash rates were low, the research showed.

More than two in five held more than 10 per cent of their portfolio in cash, compared with about a third in 2013. The key reason was they were “waiting for a better investment option”.

But the low cash rate also drove reallocation to Australian equities and other non-traditional asset classes, with 49 per cent looking to alternatives to push up returns.

Got questions? 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 Youtop right hand side above.

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

0407 361 596, Paul.

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Masterclass SMSF – Insurance in SMSF – What is possible and what is not

Masterclass SMSF – Insurance in SMSF – What is possible and what is not

Insurance in SMSF – What is possible and what is not

Part of the Trustee compliance responsibilities include consideration of holding insurance in SMSF but need to know what is possible and what is not (section 4.09 (2(e)) Superannuation Industry (Supervision) Regulations 1994). However trustees are not compelled to take it out, but provide evidence it was considered.

There are four differing types of insurance that Trustees need to consider.
1. Income Protection (Salary Continuance) Insurance
This provides a benefit if you’re unable to work due to an illness or injury and cannot meet ongoing financial commitments. The premiums are tax deductible to both the SMSF or individual. If the SMSF receives insurance proceeds the member will need to have temporarily ceased work due to physical or mental ill health, to be eligible to receive the benefit in the form of an income stream from the super fund and proof will apply.
2. Life Insurance
Life insurance provides a lump sum in the event of death to dependents and can help increase the amount payable to cover for loss of earnings and ongoing financial commitments. The premiums are tax deductible to the SMSF, but NOT to an individual. Life insurance is commonly provided together with Total and Permanent Disability (TPD) insurance.
3. Total and Permanent Disability (TPD) Insurance
Total and Permanent Disability (TPD) insurance provides a benefit in the event of becoming totally and permanently disabled.
The premiums are tax deductible to the SMSF, but not to an individual. However, the extent of the premium’s deductibility for the SMSF depends on whether the TPD insurance relates to ‘any occupation’ (
From 1 July 2014, the only definition that will be permitted will be the ‘any occupation’ definition, meaning the ‘own occupation’ definition of TPD will be prohibited from any new policies after July 1 2014 or ‘own occupation’ (which are grandfathered, can remain if set up before 1 July 2014).
‘Any occupation’ pays a benefit if the insured person is unable to be employed in any occupation for which they are reasonably qualified, educated or experienced, due to ill health. If the policy is based on ‘any occupation’, then the premium remains 100% tax deductible.
‘Own occupation’ is a policy which will pay a benefit if the insured person is unlikely to be employed in their own specific occupation due to ill health. If the policy is based on ‘own occupation’, 67% of the premium is tax deductible. Where a policy bundles TPD ‘own occupation’ with life insurance, the premium is 80% tax deductable to the SMSF.
Typically ‘any occupation’ policies often require a superannuation conditions of release so access to
any benefit payment is often not an issue.
4. Trauma Insurance
Trauma insurance is designed to pay out a lump sum of money if you are struck with a major medical event or condition covered by the policy.
The events and diseases vary between insurance providers and depend on what level of policy you buy, but typically cover – Heart attack, Stroke, Cancer, Loss of limbs, Quadriplegia. The premiums are not tax deductible to either the individual or to the SMSF. If the SMSF receives insurance proceeds that does not coincide with the member satisfying a condition of release
under superannuation legislation, the proceeds may be trapped in the SMSF until such time that the member meets a condition of release.

The advantages of Insurance in the SMSF

  • Contributions into the fund can be used to pay the insurance premiums;
  • Trustees can customise their insurance to suit their specific needs;
  • Assists with cash flow outside of super, personal living costs;
  • Net cost saving on premiums in some cases

The disadvantages of Insurance in the SMSF

  • Sometimes more expensive due to missing wholesale cost savings which commercial funds can access;
  • Members may need to qualify for insurance (via medical tests etc) which they were not subject to in a retail or industry fund.

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar  or call us 0407 361 596.

Got questions? 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.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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CASE STUDY – Ian & Jillian wanted control of their super investment and planning help as needed

CASE STUDY – Ian & Jillian wanted control of their super investment and planning help as needed

Ian & Jillian wanted control of their super investment and planning help as needed

WHERE they were at – Just starting retirement slowly by working part-time, Ian & Jillian wanted to have more control of their super investments as well as planning-help as they needed it. Ian wanted to follow the share market closely and learn how to invest for a good return. Jillian was happy to keep busy working part-time. But the complexities of understanding eligibility and applying for Centrelink benefits seemed daunting. They wanted to know who to turn to, and receive trusted recommendations

What they WANTED to have – They had paid their house off and had no car loans any more. The home was in good maintenance, but some small projects always waited, and some money would be required. The cars were maintained and were not too old, so no pressing need to upgrade yet, but maybe in 5-6 years. They wanted to have 1-2 trips to the sunny north states if possible per year, and be able to dine out once a week or fortnight, but not too expensive.

What it would COSTKnowing their weekly and monthly expenses, their retirement that they wanted was modest, and they calculated that $50,000 would be comfortable for the living standard they required.

What they would NEEDTo be safe, if a conservative investment return of 5% is used, (one 20th of 100%) this means one requires at least 20 times the income/return goal – that rounded to approx. $1,000,000 in assets that can generate a return. Having $300,000 in super combined they were short of being totally self-funding in full retirement.

What to do NOW Ian & Jillian spoke to their advisor. They found there were options and a Government Pension was possible, so there was no need to panic about low super. Ian liked the opportunity that he would be able to watch, learn and make decisions about what companies their super was invested in. He liked that the SuperBenefit Programme recommended broker supplied a list twice a year of companies with strong financial health that are likely to perform well.

We were instructed by the planner to set up the SMSF and applied to the super funds to roll-over to the new SMSF bank account. Then they spoke to the stock broker about the list he had created for SuperBenefit clients, of healthy Aust companies based on the 12 financial health criteria. Since 2010 they have made returns ranging from 8-18%.

They also had peace because any queries or compliance issues, could simply be directed to the administrator, who would  CONNECT them to the right advisors as required (SMSF Connector Service)

They now had the components in place –

Strategy to take control of the retirement plan, and

Structure an SMSF using SuperBenefit administration, alongside part-time work and later Government pension

Support with resources and all compliance taken care of by SuperBenefit, as well as a team of specialist professionals that the SMSF Connector service provides

Note This is a simplified summary of one client – we recommend asking for a FREE consultation and/or seeking further professional advice with our recommended advisors or your own.

Got questions? 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 Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also!

No obligation. 0407 361 596, Paul.

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MASTERCLASS Investing – Return on Equity (ROE) of a company – Compared to its Industry Average

MASTERCLASS Investing – Return on Equity (ROE) of a company - Compared to its Industry Average

Investing – Return on Equity (ROE) of a company – Compared to its Industry Average

One important ratio investors like to consider is the Return on Equity (ROE) of a company when compared to its industry average. From the Balance Sheet, we have learned that Equity is the value of the Assets less Liabilities. And from the Profit and Loss we found that the Return is the net Profit – sales less cost of sales, less overhead expenses.

ROE is then the Return divided by Equity – ROE = Return/Equity.

A business that has a high return on equity is a business that is capable of generating cash well. For the most part, the higher a company’s return on equity compared to its industry, the better. And there is a good chance the business that has a good history of ROE may continue to do so. This favours investors who will want to back a good company, and can help drive share price up – and hence returns for the investor.

As an example, a business with $5 mill in profit and equity (shareholder worth/equity) of  $100 mill has a ROE of 5/100 which is 5%. And the higher the Return the better.

Next, ROE needs to be considered alongside other factors. These include the industry the firm operates in – some industries can produce higher ROE than others. It is also important to consider the debt the company carries as this can inflate ROE but also increase the riskiness of the company.

A high ROE suggests a company may be generating superior profits from its operations (its equity), while a low ROE may suggest a company is producing a sub-par return from its operations.

Generally, financial sites and reports calculate return on common equity by taking the income available to the common stock holders for the most recent twelve months and dividing it by the average shareholder equity for the most recent five quarters. Some analysts will actually “annualize” the recent quarter by simply taking the current income and multiplying it by four. The theory is that this will equal the annual income of the business. In many cases, this can lead to disastrous and grossly incorrect results. If you are looking at a retail company, fifty-percent or more of the store’s income and revenue is generated in the second quarter during the traditional Christmas shopping period. An investor should be cautious not to annualize the earnings for seasonal businesses such as these.

Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know, with bonus TIPS 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. Get you copy now – click “Free 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!

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NEWS – Call for specific SMSF LRBA accreditation

NEWS – Call for specific SMSF LRBA accreditation

Call for specific SMSF LRBA accreditation

There is a suggestion that those involved in borrowing in self-managed super funds (SMSF), should hold specific SMSF Limited Recourse Borrowing Arrangement (LRBA) credibility’s. As Krystine Lumanta of selfmanagedsuper wrote recently
All parties, particularly lenders, involved in the limited recourse borrowing arrangement (LRBA) process for SMSFs should be made to hold specific designations, separate to the qualifications already available in the industry, an industry aggregator has said. “[SMSF borrowing] is specialised lending, so I don’t think every man and their dog should be allowed to write SMSF lending,” Outsource Financial chief executive Tanya Sale told selfmanagedsuper. “There should be a special accreditation for it going forward because you’re dealing with someone’s super. “That’s one thing I’m in favour of.”

Sale said understanding the complexities of SMSF borrowing in-depth would help avoid future blow-ups. “When [lending] first came about, the SMSF borrowing loan-to-value ratio (LVR) was in line with commercial transactions, so about 65 per cent to 70 per cent,” she said. “It should’ve remained there, but then lenders allowed it to go to 75 per cent, 80 per cent and beyond because there was such a massive opportunity and demand from SMSFs, but it should never have gotten that far.

“Then the unrest became known because it wasn’t done properly, so now we have a big opportunity to put the LVR back to where it should be; where it was designed to be. “That’s where we went wrong in our industry – the lenders allowed anyone to be a creditor.”

Commenting on the current environment, she said she had seen examples of high-quality borrowing specialists in the industry, including advisers and lenders. “For them, it’s been all about the client,” she said. MORE HERE

Get our FREE Expert Guide – Self-Managed Super and You – it has all the info you need to know, with bonus TIPS 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. Get you copy now – click “Free 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!

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Masterclass SMSF – Last few days! End of Year review all is in order

Masterclass SMSF – Last few days! End of Year review all is in order

SMSF – Last few days! End of Year review all is in order

Only a few days of the Financial Year left – have a final review all is in order and all papers documenting all transactions during the year, are in hand and ready for auditor and accountant verification. Here are some other tips to consider –

1.       1 Contribution Caps

The concessional contribution (tax deductible / employer) cap for 2014/15 is $30,000. For members who were aged 59 years or over on 30 June 2013, and 49 or over at 30 June 2014, these members are able to contribute concessional contributions of up to $35,000 for the 2014/15 financial year. If you had more than one fund, all concessional contributions made to all your funds are added together and counted towards the one cap. This cap was not indexed. MORE HERE

2.     Minimum Pension taken

If there are members in the pension phase, ensure that you have received the required minimum pension amount by 30 June 2015. Failure can result in the investment income derived from your assets supporting that pension no longer being exempt from tax and other penalties could apply.

3.     Claim Tax Deductions for Personal Contributions (Non-Concessional)

If you are claiming a tax deduction for your superannuation contributions, make sure you are eligible to claim the tax deduction – seek advice if you’re unsure. An error in over-contributing or claiming a tax deduction for personal superannuation contributions could have excess tax consequences.

4.     Off-Market Transfers

You are still eligible to conduct in specie contributions of shares to your fund for the 2014/15 financial year. Listed stock held in your personal name can be transferred to your fund as non-concessional or concessional contributions (if eligible) to your SMSF. Consideration should be given to capital gains tax, contribution caps and the off market transfer procedures.

5.     Government Co-Contribution

Remember to take advantage of the Government co-contribution by making a non-concessional (after tax) super contribution before the end of the financial year. For every dollar of eligible contributions, the Government contributes 50 cents to your superannuation up to a maximum government co-contribution of $500. The maximum government co-contribution is payable for individuals on incomes at or below $33,516 and reduces by 3.33 cents for each dollar above this, cutting out completely once an individual’s total income for the year exceeds $48,516.

6.     Investment Strategy was followed

Review your investment strategy and ensure all investments have been made in accordance with it, and the SMSF trust deed. Also, make sure your investment strategy has been updated to include consideration of insurances for members.

7.     Insurance Policies

From 1 July 2014, new rules come into effect that will prohibit superannuation fund trustees from providing an “insured benefit” in relation to a member unless the insured event is entirely consistent with a superannuation condition of release. This means that trauma policies and own occupation Total and Permanent Disability (TPD) policies will not be permitted. However, it is important to note these new rules will not apply to policies taken out prior to 1 July 2014.

8.     In-House Assets

If your fund has any investments in in-house assets you must make sure that at all times the market value of these investments is less than 5% of the value of the fund. Do not take this rule lightly as the new SMSF penalty powers will make it easier for the ATO to apply administrative penalties (fines) for smaller misdemeanors ranging from $820 to $10,200 per breach.

Got questions? 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 YouTop right hand side above.

If you have any questions, why not give us a call – it’s FREE also!

No obligation. 0407 361 596, Paul.

 

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NEWS – Superannuation contributes to Australian Economic stability (ASFA)

NEWS – Superannuation contributes to Australian Economic stability (ASFA)

Superannuation contributes to Australian Economic stability (ASFA)

Superannuation is contributing to the economic stability and growth of the country, according to a report by the Association of Superannuation Funds of Australia (ASFA).

The report found compulsory superannuation has:

1.       Reduced the cost of the Age Pension on the Budget;

2.       Substantially diversified assets Australians hold;

3.       Reduced risk; and

4.       Increased returns for people.

The growing superannuation pool has contributed to Australia having a high savings rate and is reducing Australia’s reliance on foreign capital, reducing both the risk and the cost of investment in Australia, the report said.

ASFA chief executive, Pauline Vamos, said as other countries had difficulty finding funding during the global financial crisis, super funds were an important source of capital for Australian companies to refinance.

Vamos noted that compulsory and voluntary superannuation has transformed the assets Australians hold.

“In 1990, Australians’ savings consisted almost entirely of real estate and cash. Today, through their superannuation, Australians are investing in a diversified range of assets, including domestic and overseas equities, fixed interest, infrastructure, and commercial property,” she said.

As reported by Jassmyn Goh at Money Management

Interested to know what self-managed super (SMSF) is all about, and if it is for you? Book for a FREE webinar with bonuses NEXT month Self Managed Super Fund Roadmap (all you need to know) for the next monthly event, see SMSF – FREE Seminar  or call us 0407 361 596.

Got questions? 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 Youtop right hand side above.

If you have any questions, why not give us a call – it’s FREE also! No obligation. 0407 361 596, Paul.

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