We all aim for a golden retirement, but with the high expectations, a rising cost of living, and many of us living longer, the reality is that many of us won’t have enough money in retirement to see us through.  There are a lot of strategies that you can use to boost your retirement saving in superannuation.  We’d like to introduce you to some of these concepts – and it’s not just about buying property with your super!

Investing more outside superannuation

One way to boost your super savings is to invest more outside superannuation.  These can include investment vehicles such as margin loans etc.  The drawback with these strategies is that they usually don’t have the same tax incentives that are often offered by the Australian Government as does superannuation.  In addition, there are cash flow considerations as well.  Investments into shares, property, commodities, bonds etc. will all have different effects on your cash flow and tax situation.

Investing more inside superannuation

Borrowing to invest in property – particularly using a Self Managed Super Fund (SMSF) has become very popular in Australia over the past few years.  However, borrowing to invest in super using other asset classes is often overlooked.  There are ways to gear inside super using equities that have the potential to provide higher returns for your super.  Of course, there is also a magnified potential for loss which should not be overlooked.

 

A hidden gem with superannuation in Australia is the current 15% earnings tax.  This means that the most your super fund will pay is the concessional 15% tax rate.  The earnings on shares, for example, may come with franking credits of up to 30% – this means that tax has already been paid at 30% on your income.  As this rate is higher than the concessional tax rate, you may get a tax refund for your super fund.

In general, banks will lend up to 50% of the value of a share portfolio.  Given the nature and regulations of super, the loans which are used are different to your normal margin or share loan.  In some circumstances, you may be able to borrow up to 100% of the value of a share portfolio.  With these types of loans however, you may not receive any franking credits and may lose some of the tax benefits so it’s a good idea to seek professional financial advice first.

Regardless of your retirement plans, you should mak sure that if you’re considering gearing inside superannuation, that it’s part of an overall strategy aimed at helping you to achieve your long term financial goals.  Consider speaking to one of our financial planner in Sydney who can assist you in designing a personalised investment strategy aimed at helping you to achieve your short and long term financial goals for the future.

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