Super Strategies - Investing with Self Managed Super Funds

Jason · 00:00Welcome

Jason · 00:00to episode 205 of The Numbers Game. I'm Jase. I'm here with Nick and Marty. How are we guys?

Marty · 00:05Feeling really good. Thanks, Jase. Uh, inspired by Nick Riley's last episode, uh, on diversification, risk grading on your investments. Uh, very, very great stuff. And today I want to talk about self made super funds.

Marty · 00:20So I started one up. A few years ago and, uh, yeah, I've got some good stats on it. I think it will appeal to the audience. So Dick, how are you?

Nick · 00:28Uh, I'm good, mate. And I'm, um, Inspired. So would you go, no doubt you went and pumped a heap of money in some undervalued stocks last week or talk us through it.

Marty · 00:38Just buying, just buying the dip, waiting for the crash, buying the dip.

Nick · 00:44Okay, just looking for some value. Anything you got for us?

Marty · 00:47Uh, just go and talk to Luke Mace cause he, uh, he's the one to keep the emotions in check, that's for sure. Charlie nearly had a conniption when, uh, the Poulter Group share he invested in as his first share come

Marty · 01:00plummeting down back to even, I said, Hey, you're doing all right, you haven't lost anything.

Marty · 01:03But, uh, to a 10 year old kid, he doesn't want to lose that 2 that he earned. How much was he up? It's pretty funny. Uh, he was up, he was up, um, how was he up? About 21 bucks. And, um,

Nick · 01:15but percentage wise.

Marty · 01:17Percentage wise, 11 percent and he's back down to about 2%. Um, and it might be better now because he, um, you know, we're, we're through the volatility, I think, but it could still go down, but he's sort of saying that shows you the emotion though.

Marty · 01:32He goes, let's just sell it just in case. Let's just sell it. And I go, but it costs three bucks to sell it. So then you're negative one and we hold this for 10 years. Remember, remember the plan. And it's, uh, so it just goes to show you, even though, you know, We discussed the plan, uh, how emotional that three bucks can be.

Marty · 01:50Yeah. Well, mate, look,

Nick · 01:51as long as he's got six months of lunch money put aside, then he's just got no need to sell it. He's got, he's got an appropriate risk profile.

Nick · 02:00I wish

Jason · 02:00my lunch was only costing that amount. But anyway, uh, On the topic that you've brought up here, Marty, I'm, I'm excited to dive into it too.

Jason · 02:07Uh, probably, you know, didn't say this beforehand, but one of the fastest growing areas at Future Advisory is, uh, accounting for self managed super funds. Um, we've got a lot of clients that are getting to a certain age where, and I guess a certain point of their business owner lives where, you know, their businesses are more established, they're making more income, they're making the maximum super contributions.

Jason · 02:29And all of a sudden there's these options that are popping up in relation to, you know, buying property. Um, and one of the things we talk about is structures, you know, and you got unit trusts and companies and only things in your own name. But one of the other ones that is very popular is the old self managed super funds.

Jason · 02:45So yeah, love for you to lead the conversation on, on what we're going to unpack today.

Marty · 02:50Well, I'm glad you mentioned this because in the finance business, I, I think we might've done about five or six, uh, finance deals the previous year in

Marty · 03:00self managed superfunds. So it sort of went off the boil a little bit, but, um, in talking to a lot of the brokers in the last couple of weeks, I reckon we've done six in two weeks and I'm going, there's certainly.

Marty · 03:12Something going on here from a growth perspective. And certainly people are looking to, you know, purchase property through it as well, but I thought I'd give you some stats on it just to wet the appetite as much as, uh, self managed super funds can wet the appetite. You know, we like numbers, Marty. You know, we like numbers, give them

Jason · 03:28to us.

Marty · 03:29Well, as of March 24, this year, 616, 000 self managed superfunds are established, maintaining 1. 1 million members. Um, so the collective assets of the self managed superfunds 933 billion. So that's 24 percent of the total invested in super of 3. 9 trillion. So quite significant. 16 percent of those self managed super

Marty · 04:00funds.

Marty · 04:00So 98, 500, uh, Members have direct residential or commercial property assets. So I like that because it's still in my mind underutilized. Um, and I think we have a love affair with property. You know, we, we just, you know, in Australia in particularly, um, anytime we can get into property in some way, somehow.

Marty · 04:23We will try and find that way. Um, the medium age group of established self managed superfund members was 62 years of age. That's for established. However, the average age of newly established members is 46 and the developing age group of 35 to 44 years of age is now 10 percent of all members. So there's certainly an.

Marty · 04:47An appetite increase for people wanting to control their own future and their own money within the self managed super fund. Um, interesting to hear those stats in regards to

Marty · 05:00growth, surprising or something, Jase, you're already seeing at the front end.

Jason · 05:03Yeah, I think those, those statistics just kind of drive home why we're starting to see more self managed super funds at Future Advisory.

Jason · 05:11Our kind of clients age group would definitely fall in that 35 to 44 group. Um, so, you know, we've still got a, a younger client base compared to a lot of the other accounting firms out there that have a more, I guess, established client list if they've been around for 10, 20 years. Uh, we're a younger firm with a younger client list, but yeah, starting to get into that, that age group as well.

Jason · 05:32So

Marty · 05:32what's involved in setting one up, like how, how complex, how simple is it? Like, what are, what are the parameters of what you need to do to set up a self managed super fund first of all, Jase, just to give the audience some perspective.

Jason · 05:47Yeah, look, good question. I might get Nick involved here a little bit as well.

Jason · 05:50Um, from the accounting world, it's actually not that complicated. When I say, you know, when you've got the right people involved. So you've got to form a

Jason · 06:00self managed super fund trust deed. Um, you've got to get that created by lawyers or a legal team. And usually through your accountant, you can sort that out.

Jason · 06:07Um, then you've got to decide whether to have, uh, an individual trustee or a corporate trustee. Now, anyone who gives, Good advice is angling towards corporate trustee, which means that you've got a company in control of your self managed super fund and the company acts as the trustee. And then usually the members are the directors and shareholders.

Jason · 06:27Um, and look, the, the bit that I say, why I wanted to get Nick involved in this is we strongly. And 99 out of a hundred, you know, what I'd say, um, statistically over the years have involved having a statement of advice from a financial planner. Um, unfortunately in self managed super fund territory over the years, while they are becoming more popular, they are also can be expensive to run.

Jason · 06:52And there's a lot of mistakes that can happen. I guess if you hand over control to. You know, couple of hundred grand worth or more of

Jason · 07:00super fund assets and give the keys to an individual who can do the wrong thing or not get it right when it comes to investments and allocations. Um, having a statement of advice from a financial planner is absolutely one of the biggest requirements we have.

Jason · 07:12And the industry has across the accounting industry for setting up a self managed super funds. So, yeah, Nick might be able to touch on the statement of advice and why that's required.

Nick · 07:22Let's let's, let's be honest. It's. It's a self managed super fund and you, you ask 99 percent of the, um, population, talk me through how you're going to manage your super fund.

Nick · 07:36The first thing they would say is, I don't know. So there's, there's no point dancing around it. The whole reason people want self managed super funds in our country is to buy property. And I actually think that's a really good strategy as long as it's in line with, you know, the stuff that we've spoken about in previous episodes, risk profiles and whatnot.

Nick · 07:56Most people, uh, number one, won't have the ability and

Nick · 08:00number two, won't want to manage their own share portfolios. Um, or, you know, you can do some wacky things inside of the super fund, like, you know, buy art and these kinds of things. Most people won't want to get involved with that. The reality is most people in this country want to buy property, which I think's great.

Nick · 08:16Um, if that's what you want to do, as long as you're buying the right type of property. So I think what a statement of advice does and the, the ATO is pretty strict on this stuff now, Jase. Um, they want people to understand that, okay, this is still your super. The whole reason we create super funds is so that when you retire, you have money there and you're not reliant on the government pension.

Nick · 08:41So that's why we have industry funds. Um, that's why we have employers pay a certain amount of, um, someone's salary into the, into the super fund. If someone to your, to your, um, point, Jace gets the keys, they've actually got access to that money. So an

Nick · 09:00individual now has access to their super fund, uh, not legally, but they could literally log online and transfer the money out if that's what they wanted to do.

Nick · 09:07So there's a lot of rules and regs around it, um, particularly in setting one up So what, I guess what the Statement of Advice will do is it will, it will stipulate what the risks are with setting one up, the things you need to be aware of, what it takes to run one. Um, it will generally develop an investment strategy inside of that fund for you.

Nick · 09:27So, What, what are you actually trying to achieve with this fund? What is your risk profile? These types of things. So it's exactly the same as if you had an Australian super fund. Um, as far as risk profile goes and the things you need to be aware of, the difference is, um, for most people, the difference that people are interested in is the fact that they can hold direct property inside of that fund.

Nick · 09:48So one of the things that we see a lot of. Is, um, cause we, we do manage quite a few, um, self managed super funds. Uh, people buy a property because that's what they wanted to do, but then they

Nick · 10:00still want advice because they've, they've bought the property and that was great, but they don't understand what that property does for them as far as retirement does.

Nick · 10:08So is the strategy to pay the debt off? Is the strategy to buy another property? Is the strategy to, to start to diversify your funds within the self managed super fund and go into some different, um, other Um, stocks as well, or some more liquid investments because property's not that liquid. So we're really just seeing super funds created or self managed super funds created to access direct property.

Nick · 10:32And then people still coming for advice because they still want to know how the whole thing works from an investment point of view to get them to their end goal. Um, and that's where the financial plan will come in. Um, and further to that, um, an investment strategy for the individuals.

Marty · 10:46Jase, what is a bear trust and why do they have a bear trust when a property is being purchased in super?

Jason · 10:52Very good question, Marty. Uh, that is because self managed super funds are prohibited from borrowing. So what you want to do there is it's basically separating your

Jason · 11:00assets from, from the risk and separating your assets from the borrowing. Um, so a bear trust is what's used to get the borrowing separated away from your self managed super fund.

Jason · 11:09So, um, they're usually referred to as LRBA, which is Limited Recourse Borrowing Arrangements. And, um, yeah, from what I hear from the teams, lovely teams that we work with for these is, um, it can be, You know, a little bit more complicated, a few more loan to value ratio requirements, um, that the big banks, uh, I'm not even sure if the big banks do too much of it anymore, but the lenders, they, there's a lot, a lot more requirements that need to be ticked off in relation to this, but yeah, the self managed super fund itself doesn't take on debt.

Jason · 11:39So can't do loans.

Marty · 11:40Perfectly explained. That's one thing, uh, people trying to buy property in the South East, just can't get their head around. So I think beautiful explanation, but, uh, in regards to, you know, even in regards to the major banks, the appetite. Has moved away from them wanting to fund, uh, properties in the, uh, self

Marty · 12:00managed super fund.

Marty · 12:00So they're, they're not coming down on rates. So you've got a lot of clients around that nine and a half percent to nearly 10 percent that. Uh, actually locked into that rate. So they can't go back to the lender and refinance at a better rate. And it's, uh, it's very frustrating cause it's eating into, you know, it's eating into your future really.

Marty · 12:22So we're seeing a lot of people come to us at the moment and look for other alternatives and we're getting some really good rates and some, depending, like you said, the lower the loan to value ratio, um, the better the right, the higher the loan to value ratio. The higher the risk, the higher the rate, but we're seeing significant savings.

Marty · 12:44Like instead of 9. 5%, you know, we're down to sometimes even down to low 7%, which has a significant difference, um, to, to clients, uh, future now and in the future. So. That's something if you're looking to

Marty · 13:00refinance, uh, definitely reach out because there are lenders there that are very good at this type of lending and are hungry to actually, you know, service these types of deals.

Marty · 13:10So we're seeing a lot of that happening over the last couple of months in particular, but it seems to be growing and you generally see people and look, I'm being very generic here. But, um, buy properties within that 600 to 800 grand range. And most people generally will have around about 400 to 500 in super looking to purchase a property.

Marty · 13:34Now, 86 percent of all self managed super funds have balances greater than 200, 000, which makes sense because there's a bit more costing in setting them up as well. And even at that 200 level, Um, you know, you could still look to buy property, just at a lesser value. The other thing to appreciate is, uh, liquidity ratios as well.

Marty · 13:56So even though you might be utilizing your funds within super to buy an

Marty · 14:00investment, the, you still need to have, and it depends on which lender, uh, Uh, five to 10 percent of stocks held that you have liquidity other than property. And I think that's purely, I would think Nick, that's just purely a diversification play to make sure you're not putting everything in one bucket.

Nick · 14:17It's probably more about getting you through a difficult time. So, you know, hypothetically, um, it's untended. The property's untended for 12 months. You've obviously got a loan repayment that's got to be met. So that's just trying to, yeah, it definitely comes back to diversification for sure, but it's just making sure that, you know, if there's an issue with that property over a short period, you're not going to be forced to sell it.

Nick · 14:40There's going to be some cash there.

Marty · 14:42Okay. Yeah. And look, just to give you an example of the numbers, like people have been moving into purchasing, um, in their super property in their super, because sometimes at the moment, cash flows a little bit strapped outside a super. So let's just say we want other alternatives.

Marty · 14:58We want to, you know,

Marty · 15:00we can only borrow so much in our, given our incomes. And this is another vehicle where we could, we can look to potentially acquire another property to work for us in the future. Um, so to give you an example, what they will look at is they'll look at what is the rent you're receiving for the property.

Marty · 15:19And they'll take the rent at 80%. This is how the lenders look at it. And they'll also look at your super contributions. Now that's all they will really look at in regards to servicing that debt within the super fund. So let me give you a couple of examples. If someone purchased for 800, 000, their minimum contribution towards the purchase was 330, 000, covers the stamps.

Marty · 15:44Um, and this is at 65 percent loan to value ratio. So this means you're borrowing 520 and it's seven and a half percent. Let's be conservative there. We'd probably be able to get better. That's 39, 000 a year. Now the bank will assess it at a buffer rate of 2

Marty · 16:00percent on top of that. So it'll be assessed at 9.

Marty · 16:045%. So that's about 49, 400 a year. So let's take our rent. Let's say on an 800 grand property, we're getting 700 a week, 36, 400 per annum at 80%. You get 29, 120 and then you'd need your super contributions to cover the difference. So basically on that metric, you'd need a couple of people earning a hundred grand, uh, each to be able to execute on that deal at a higher level.

Marty · 16:33Or if you're an individual, uh, around about 200, 000 to be able to make that deal happen. Now to give you like just a smaller scale type of investment, um, let's say you're buying for. 500, 000 and you want to go up to 80 percent of the value. So with residential property, you can go up to 80%, but of course, you know, there's slightly more risks.

Marty · 16:56So sometimes the rates are a bit higher. With commercial property, you can go

Marty · 17:00up to 75 percent as a maximum, uh, on a commercial property within super. So let's work on the 500 grand scenario. 110,000 contribution towards the purchase, uh, to cover the 20% plus stamps. So you're borrowing 80%, which is 420,000.

Marty · 17:17Uh, that seven and 5% is uh, 31,500. And if we look at that buffer at nine and a half percent, that's 39,900 in the way the bank will assess that deal. Rent of four 80 a week. You know, better yield. Better yield, bigger the yield, the better, obviously, uh, 24, 960 coming in per annum at 80%, 19, 968. So on that 80 percent level, you would still need two people on a hundred grand to make it work or an individual on 200 grand, because we're leveraging up and we need the super on the income to be

Marty · 18:00adequate as well as the rented 80 percent to cover that.

Marty · 18:03And if we traded that. Uh, let's say we only borrowed 65 percent on that 500, 000, bigger contribution going in of 205, 000 to cover costs. This is at six, this is at 65%. That means we borrow 325, 000, sorry, a lot of numbers I know, 7. 5%. That's 24, 375 at 9. 5 percent on the buffer, that's 30, 875. But now we've got rent still at 480.

Marty · 18:3324, 960 per annum at 80%, 19, 968. Now in this situation, you could have two people on 65, 000 income to make this work or an individual at 120, 000 per annum. So I just, I know that's a lot of numbers there, but I just want to bring it up in saying that, If you can put together a bigger contribution, you want this to

Marty · 19:00be neutral or positive, you know, where you can, because you want your asset to be growing as well as the yield being good as well.

Marty · 19:07So it all comes back to individual circumstances and seeing what works for you, but that gives you, you know, just some high level numbers there of what you'd need to be earning to be buying at those levels, um, based on the super you're getting off your wage as well as rent, uh, makes sense. Lots of numbers, but.

Marty · 19:26Good numbers.

Jason · 19:27Lots of numbers. Makes sense. Yeah. And look, I mean, these are the things about self managed super fund. You know, it is a lot of numbers and a lot of things to make sense of. Um, You know, on the bear trust that we mentioned before, you need one of them for every single property you own. So, you know, there's things to learn about a self managed super fund, um, you know, you don't know right now.

Jason · 19:46And if you are looking to get into it, you've got to start having these conversations and start to broaden the knowledge, but this is also an opportunity for those people that are sitting back going, geez, I don't know how I can get into the property market. You know, I haven't built a big enough deposit personally, but

Jason · 20:00potentially, you know, you have been working for a long time and in your super fund, it's been going up in the right direction.

Jason · 20:05This is potentially an opportunity to look to diversify by getting some property through your super fund. Um, again, I stress the importance of talking to a financial advisor because it's, you know, while we think property may be the best outcome, maybe it is. the stock market and a different diversification or different asset allocation as we've been learning in recent EPS.

Jason · 20:25Um, but yeah, we've definitely seen self managed super funds used so well though, especially as I said, for commercial property purchases, where let's say a plumbing business or, you know, a trade or construction business is able to rent their own property off their self managed super fund. So, you know, you become your own landlord.

Jason · 20:43Again, there's all these different rules, but yeah, very interesting stuff. If you can pull it off.

Nick · 20:47Yeah. And just to put it into a, uh, an example of a strategy too, and why this can really work if people have the right strategy. Um, but you know, just, just picture, uh, the 40 year old

Nick · 21:00couple buying, um, for 500 K as Marty suggested there, the one thing that you will do in the super fund is you will pay the debt off.

Nick · 21:06So, you know, hypothetically, you've got a repayment over 30 years. So that when you get to age 70, which might be your retirement age, that asset that you bought for 500, there's now zero debt on that asset. So the challenge is, well, quite often that property will not provide enough income from a rental point of view to support, um, those people in retirement.

Nick · 21:32So let's just, let's just pick some numbers here. But if, if you bought that property for 500k, um, when you were 40 years old, By the age of 70, surely in 30 years times, it's going to be worth 2 million bucks. Give or take. Yep. Grab that money.

Marty · 21:49Yeah, I'd be happy with that. Absolutely. I'm getting excited.

Nick · 21:52Now let's say the yield on that.

Nick · 21:54I'm just again, picking numbers. You'd say the yields 4%, which is 80 grand a year.

Nick · 22:00Um, take off some costs, 75 grand a year, but fast forward 30 years, that's probably not going to be enough for people to live off. So whilst people are buying properties in their super fund, generally when they get to retirement, They're generally liquidating them because so much of that value in their super fund is tied up in an illiquid asset.

Nick · 22:19Now, say 2 million bucks is tied up in money. They can't touch and they need to get it because they need to retire on it. But what they can do in their super fund is obviously sell that property. And because they've rolled into pension phase, it's actually zero tax on it. So instead of you buying in your own personal name at age 40, getting to the age of 70.

Nick · 22:42That property's gone up by 1. 5 million. You're probably not working at the time. So you've got no income outside of the capital gain, but the capital gain is going to be 1. 5 million spread across you and your partner. Obviously you'd have that in two. So what's that? Jase helped me out here, 750, but divided by two.

Nick · 22:57So you're still paying tax on 375 each,

Nick · 23:00which would be, Jase, how much? Give me a rough number in today's.

Jason · 23:05Well, nearly half of that. So 150 to 160, 000. Okay. Each.

Nick · 23:11Yep. So about 300 grand in tax on that scenario. And you will get to the point, as I said, you'll need to sell it because people need to realize those funds.

Nick · 23:19So buying it in that super fund means that, well, number one, you sell it and you don't pay capital gains, and then number two, that money is then stuck in that, inside that super fund. So. Because you're in pension phase, you, let's say you sell that property for two million bucks, you've then got two million bucks to put into a, uh, a conservative asset like a term deposit earning you five percent a year, two million on five percent is a hundred grand, and there's no tax on that because it's inside the super environment, so you're getting a hundred grand a year tax free, so it is a really cool strategy, um, if you get in early, if you get in early and you just have a slow strategy to pay it off, And you've got a debt, you know, you've got no debt come retirement with an asset.

Nick · 23:58That's probably conservatively

Nick · 24:00worth 2 million bucks in 30 years time. Um, pretty good way to, to dodge tax is the wrong word when you didn't need to. It's a legitimate, um, it's a legitimate, um, strategy.

Jason · 24:12Yeah. And that is why I mean, even the SMSF or super funds in general being taxed at 15 percent through all of the earnings and the growth and you know, the dividends, the interest earned on savings or the rest of it, you know, if you think about.

Jason · 24:25If that was in your own name, that maximum tax rate's 47 percent right now. So there's a huge benefit throughout the lifetime of growing that wealth. And then, as you said, Nick, you absolutely hit the nail on the head. Imagine getting that, you know, 1. 5 million capital gain event. Zero tax, tax free. That's where it's at, baby.

Nick · 24:42Yeah. And that's, you know, just for everyone out there, not to get confused with the 15%, but once you do hit preservation age and you can roll into. Um, and that's why again, it's important, um, I'm not plugging advisors here, but to understand the strategy. Okay. What is the

Nick · 25:00strategy? What's the long term plan here?

Nick · 25:02Okay. We really probably need to make sure we keep this until we're in the preservation age, because then we're not going to pay any capital gains. So we've got to make sure we have a strategy that allows us to do that.

Marty · 25:12In regards to the usage of the investment, um, like you said, there's some, there's some pretty strict parameters around that, uh, big difference in buying a commercial property that you operate your business out of, as opposed to buying a residential, uh, property that you want to work from home, which you can't do.

Marty · 25:31And I've, I've had that come up a couple of times. Um, so yeah, just maybe give some, Guidance around that.

Jason · 25:37Definitely that there's just so strict rules, strict rules around the use of that. So, you know, when a commercial company, when a commercial business, a company is renting off a self managed super fund, create some arm's length, um, that it is, you know, separate from the individual taking a benefit of that, where it is residential property.

Jason · 25:54Absolutely cannot be used by you, a family member, you know, you can't purchase a holiday house in your

Jason · 26:00self managed super fund. And, you know, when it's not being rented out on the weekends or, you know, during the week, head down there and just enjoy the property. Um, yeah. And, and heaps of different little requirements too.

Jason · 26:09You know, there's a reason self managed super funds, while they make up a good percent, and there's a good number of them, there's also a reason that, you know, people aren't just going out every week and setting up a new self managed super funds and rolling, you They're super over, you know, there's, you've got to get an audit at every year.

Jason · 26:23You've got to pay accounting fees. Um, you know, usually there's an advisor involved, you know, which you want to have involved to help manage that. So there's a lot of ins and outs. And then if you do get it wrong, I mean, this is where you can see some really bad, um, you know, ramifications of getting it wrong, you know, the fines, the penalties, being struck off the register, um, so that you can't receive contributions.

Jason · 26:45Um, you know, if you go over the caps, if you don't hit the pensions, pension drawdowns properly, there's a lot of rules that you've got to follow. So it's not for the fainthearted who think, you know, just set it up and, you know, forget about it. Um, these are things that need to be constantly monitored and, and, you know, put some

Jason · 27:00energy and attention into.

Jason · 27:01So.

Marty · 27:01And I think with self employed people, sometimes they don't always, uh, pay their super to themselves as they should. I think that would be something that would come up and then they want to buy, obviously a property in their super fund. So that brings with it its own challenges, but, uh. How can we get more money into super as a business owner, Nick, in regards to the caps that are available.

Marty · 27:24And then from an accountancy piece, I guess, you know, showing the consistency of that continuing into the future, because that's something from a finance perspective, as long as we can get money in and show that it's sustainable, then that's, you know, that's a green light. So yeah, just from your perspective, Nick, on what can be, you know, what can be put in.

Nick · 27:43Yeah, well, I think it's, it's actually a really good. Um, it's actually a really good question, Marty, because I think as business owners and, you know, me, myself in the early days, you fall into the trap of not putting money into super because you don't have to, if you're not paying yourself a salary and you're only paying yourself drawings, um,

Nick · 28:00there's no requirement to put money into super, um, as to what you can put in, you know, the superannuation caps have gone up to, to 30 K a year at the moment per individual.

Nick · 28:10So we're talking about a couple, that's 60 grand a year. So you can put it, put in up to, you know, 30 grand a year each, um, and then that will come off as a tax reduction, um, off your taxable income as well. So, you know, it's a really good habit to get into, um, you know, and if you, if cash flow is tight, of course, if you're starting a new business, for sure, maybe, maybe put super off, particularly if you're younger.

Nick · 28:35But. The minute you've got the cashflow to do it, I'd recommend people at least get in the habit of, okay, well, if I was paying myself a salary of a hundred grand and that's what I'm drawing from the business, I'm going to put, I'm going to put the, the SGC component of that into super. And then you've also got the ability to, to carry forward any, um, any contributions you haven't used in the last five years.

Nick · 28:58You can actually bring

Nick · 29:00all those into one financial year now, which is highly. Highly valuable particularly, uh, for people that are experiencing whether it's a really good year in profits and they don't need all the money. Um, if it's a, um, a property they sell and they've got a capital gain, um, that's worrying, they can make a big lump sum contribution.

Nick · 29:18So, you know, we had a, um, I think I might've talked about this before, but we, we did have a couple that, um, had a, a business they'd put next to nothing into super over the last five years, sold 000 tax bill. Um, capital gain tax bill on that property. They hadn't put any money into super either of them for the last five years.

Nick · 29:42So all of those contributions they hadn't used, we could bring those, carry those forward and use all of those contributions in the one year, actually reduce their tax bill by 90, 000. So we've got it down to 20. Which is a 90K saving. So you can go back and use what you haven't used if you've had a really good year and you need to reduce

Nick · 30:00your profits or your taxable income.

Nick · 30:02Um, but I would very much encourage people to get into the habit of putting money in every year because it's also about time in the market. If you're not in property and you're just in investment markets, You need to be putting money in all the time because we've spoken prior about markets that would continuously go up.

Nick · 30:17You want your money invested in working for you. So the quicker you can get it in there.

Jason · 30:21And that this, you know, that, that idea of how much money to put in and when to put it in, at least, uh, with our business owner clients with forced or not forced. We, we work tax planning into our annual engagement with clients.

Jason · 30:32Um, so, you know, sitting down at year end, looking at, you know, was there excess profits? Was there the capital gains tax tax events, and then reviewing what are the carry forward contributions caps on top of how much of their existing cap for the year did they use? Um, and you know, there is often that conversation where, you know, by forward planning this too, you know, you might be starting to think, well, Maybe I'm not ready for a self managed super fund now, but I know I've got a couple of good years ahead.

Jason · 30:57I've structured my business or my life in a certain way that

Jason · 31:00I know the next couple of years are all go time. Maybe then it's, well, this is something I should look into. Maybe I should utilize my caps rather than, you know, squirreling that money away and using it somewhere else in my personal name. It's getting that money into super, but where we're kind of dangling the carrot to clients in, in a fun way of getting them excited about their super fund is, Hey, you might not want to self manage superfund, but here are your options.

Jason · 31:22Just, just education. You know, you can put the money in because a lot of people think, Oh, you know, I could carry forward those caps and maybe I'll get a hundred grand in this year, another hundred grand in next year, and I've just topped up my superfund balance by 200 grand. I'm going to have. 400 or 500, 000 sitting there, but I can't touch it for another 30 years.

Jason · 31:43You know, I just, I'm just not that interested in investing into super right now, but all of a sudden we talk about a self managed super fund and the ability to add a property to that. You know, the Australian dream zoning property, right? You know, it's what we love. People get excited by it. And if you can work that into your strategy moving forward to, to

Jason · 32:00get excited about super, because you know, that's a, it's a potential option.

Jason · 32:04They're the conversations we're starting to have. And this is why I believe that, you know, self managed super funds again, Marty, I think you, you know, your notes touched on the growth of the number of super funds over the years. It was like, 8, 000 superfunds set up, then 14, 000 superfunds set up. But I think in, you know, last year it was like 24, 000 set up.

Jason · 32:20So, you know, it wouldn't, yeah, it wouldn't surprise me if it doubled again, and there was 50, 000 superfunds set up in the coming year. So, you know, watch this space here, maybe something we're going to revisit when the new data comes out, but I think it's going to be a rising area. For, you know, for both of our businesses is that self managed super funds are going to be talked about.

Jason · 32:39They're going to be looked at. And, uh, you know, the great people who listen to the numbers game are going to be well aware of them and well educated.

Marty · 32:45Yeah. And a hundred percent, a lot of people just, they come from the aspect of, I just want to buy a property in super without the advice, but just listening to the last five minutes and hearing the parameters and learning those parameters and how to best utilize them.

Marty · 32:58Um, but coming from a

Marty · 33:00holistic perspective. Place too, of looking at your overall position for the future is so, so powerful. Like we all have inspiration and want to do one idea sometimes quickly before we work through it. So it's like, it's really important to get this guidance upfront because if you are making a play on it, you want, it's going to be, it could be a 20 year play.

Marty · 33:20It could be a 25 year play. So it's significant. So you want really great. Guidance to ensure that 25 years is really, really lucrative at the front end and also at the back end. Um, once that comes into position where you can maybe sell it, keep it, whatever you want to do. So the other thing on the refinance point of view is just the difference between lenders as well, just in regards to the fee structures.

Marty · 33:46Um, not only is there a right differential between but sometimes the fees in regards to setting up the finance piece. Can vary from $495 to sometimes two to $3,000.

Marty · 34:00So it's again, really important to get the advice upfront before you go into buying, to know where you stand. You can get an approval in principle on it, uh, even before you set up the company and the bear trust and various different things.

Marty · 34:15So, so again, get the right advice from all different sectors, finance, accounting, and planning, and go. into this really educated and, and, and make a great decision that stands the test of time. I just feel like, um, it's a growing area. I think it will continue to grow and it's a great vehicle, uh, to really make that financial future brighter.

Jason · 34:40Yep. Well, a hundred percent. And look, I'm going to go out here and just say it. You know, if you want a no obligation consultation with Nick, Marty, Jace, or a combination of us all together, where you can hear the tax side of things and the financial planning and mortgage broking side of things, we'd love to help you out on your self managed super fund journey.

Jason · 34:56So whether it's, you know, hitting up one of us guys on LinkedIn,

Jason · 35:00finding our businesses, future advisory or innovate or simplest place you can even, you know, head there right now. Go to at the numbers game podcast. Give us a follow on Instagram and drop us a message. Uh, Marty, the famous influencer on Instagram is, uh, very active on that podcast, on that platform.

Jason · 35:16Uh, so we'll be happy to, uh, get your details and get in touch. Um, as always like rate, share the show, get around it, subscribe on YouTube if you haven't yet. Uh, we're absolutely loving, uh, you know, having that channel available for people as well to go and watch our faces and the silly things that we do.

Jason · 35:33Um, we've really loved you joining us and Marty, thank you for the Self Managed Superfund conversation. It's been a great one for the audience and uh, until next time.

Marty · 35:40Super stuff, game over.

Jason · 35:43This podcast is for educational and informational purposes only. The conversations are of a general nature and do not qualify as financial or tax advice.

Jason · 35:52We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies

Jason · 36:00discussed. ---