Is SMSF Property Investment impossible for the younger generation? For any of you under the age of 30, superannuation is a bit of a nonentity but surprisingly many of you have got between $20 to $100,000 saved up in super, which you’ve got no idea about and that seems a bit of a shame to me because if I gave you $50,000 now, I’m sure you would know how to spend every last cent of it. Right?
Anyway, on superannuation, let’s give you a bit of a history. Way back in 1990 your parents and myself, we all underwent a radical transformation where our salary and wage increases for four or five years were basically forgiven or not able to be utilised and were transferred into super, so we didn’t get wage increases for quite a few years because all of that money that normally our employer would pay to us as increased cash went straight into superannuation. That’s where we first came up with the idea of salary sacrificing. Sacrificing wages and salary going into super, nice thought, nice term but we were stuck with it, certainly not voluntarily, it was mandatory. It was called The Accord.
Now for you, each and every pay cheque has around about 9 1/2 percent of your salary and wages paid into superannuation whether you like it or not. You can’t opt out of it unless you leave Australia and even then, if you’ve got an Australian employer, you’re still stuck with those salary sacrifice commitments. Here’s the first thing, as I said before, many of you have got no idea where your super is, you have no idea how it’s invested, yet this amount of money is your direct cash. As I said, if I gave you $50,000, you’d know exactly how to invest it and that’s the beauty about a SMSF Property Investment.
Once we set one of these funds up and it might be ours, it might be one we have with our spouse or our partner, alternatively it might be one that we are with our parents, once we’ve got that money in we can then start to choose where we want to invest. It could be gold, it could be into innovation or start up companies, it could be into Telstra or the Big 4 banks, these shares could be into what we call exchange traded funds. They could have been used as a deposit on a property. One that you can’t live on, it has to be an investment property. It’s one of the no nos about SMSFs, you can’t use the assets of the fund for yourself except in limited circumstances.
The main thing is to find out where your super is and, how it’s going, but more importantly, can you get into an SMSF. The earlier you can get in, the more money you’re going to make over time, the wealthier you’re going to be and you want to get to that path of becoming what I call an SMSF Millionaire. It will happen over time, it just simply has to because your salary sacrificing whether you like it or not, 9 1/2 percent of your income each and every pay cheque. Don’t waste your super, right now see if you’ve got enough to set up an SMSF. You probably don’t if you’ve only got $50,000 but see if you can leverage through your parents or if your spouse or partners or mates have one and set up a joint SMSF.
Anyway, SMSF Property Investment for under 30s, great opportunity, but don’t be disengaged. Get off your butt and actually have a look at where your money is. After all, it is your salary and wages.
Phillip Allen is a SMSF Specialist accredited with the SMSF Professional’s Association of Australia.
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