Building Your Own Retirement Fund

For some, the luxury of relying on employer funded superannuation is just not an option.

As employer funded superannuation only came into existence in 1992 there are many people staring down the barrel of retirement with roughly 20 years’ contributions to their funds.

This style of retirement planning can be a great advantage if you are 20 and just starting work but this may not be so for the older generation.

Don’t despair, there is an answer.

Low Tax Rate of Just 15%

More and more Australians are tuning in to the huge advantages such as a low tax rate of just 15% that building a healthy retirement fund through what is called a Self-Managed Super Fund (SMSF) can offer.

The trick is to know and understand what you can and cannot do within the fund and what is expected of you.

The truth is that this style of wealth building is not a ‘set and forget’ business. It will require a strong hands on approach and diligent care for it to be a success.

Fountain Property Group are your one stop property investment portfolio professionals. We possess a team of experts in the finance, legal and accounting fields and we understand the residential property market like no other.

This wealth of experience puts us in the front seat to be able to offer sound property advice and source the best of the best from the market.

Having said this, we would like to ensure that you are fully aware of the traps and pitfalls of such an investment scheme.

Six Common Misconceptions of an SMSF

1. First and foremost, it is absolutely imperative you understand the costs involved with this form of investment. Start-up costs are usually around the $2,000 mark and will require annual auditing to remain compliant. Annual costs will run between $500 and $1,000 per annum.

2. Due to the high cost of initial set up it is beneficial to start with a minimum of $200,000 to ensure the continued success and growth strategy.

3. There are more hoops to jump through when borrowing through an SMSF fund and you will be required to supply a personal guarantee to pay any debts incurred by your SMSF

4. Usually there is a ceiling to how much banks will finance any SMSF purchases. This will generally range between 65% and 80% of the total cost.

5. You cannot renovate property purchased through this style of fund. It is therefore necessary for it to be “tenant ready”.

6. Property purchased in this way cannot be used personally or even rented to family members.