In this day and age of economic turmoil, hesitancy and uncertainty there seems to be ever-growing clouds forming around our future and more importantly our ability to look after ourselves in our twilight years. With the erosion of the majority of Superfunds, people have seen their wealth wiped by up to 40% in line with the stock market downturn. This has been further compounded by the recent budget move of the extension to retirement age. There seems to be many fundamentals coming to bear upon our sacred superannuation.
Investment property specialist and long time property investor Mark Hay principle of Mark Hay Realty Group sees a silver lining in the current turmoil. “Under current legislation there has been a little publicised but huge shift in the way superannuation can be handled. A new superannuation ruling was brought down in September 2007 which allows superannuation funds to borrow funds for the purchase of a residential or commercial investment property via an instrument known as a Superwarrant”.
Mark Hay stated there has been an increased interest shown from the Self Managed Superfund sector as their Superfunds now have the ability (subject to certain criteria and conditions) to borrow up to 70% for residential properties and marginally less for commercial properties.
The huge losses being experienced by a majority of Superfunds with clients still paying fees to the managers of their portfolio whilst they make significant losses, are becoming continually unpalatable to many of our Mum and Dad investors. A good majority of these investors have long known the rewards of the less glamorous but far more certain returns of Real Estate and are finding the opportunity to be the ‘captain of their own destiny’ and enjoy the assured security of property a great draw card.
“I see this change, along with the fact that upon retirement your Superfund returns are tax free, to be the biggest gift handed out to Mum and Dad investors in the last 20 years, other than when Prime Ministers Hawke and Keating reintroduced negative gearing in 1989”.
For investors with $50,000 or more in Superannuation, this is a perfect way to grow substantial wealth over the medium to long term. Mark believes these significant changes have been deliberately played low key as the Superannuation Funds industry currently holds some $1.2 Trillion in management and this is set to double by 2015. With such a large amount of money churning through various funds and the ongoing collection of fees, the last thing the powers that be wish to see is people leaving the Superfunds to invest in the property industry.
Mark Hay regularly conducts informative workshops from the East Perth office. For the cost of a $20 donation to Princess Margaret Hospital, Caring for Kids Foundation, you can attend a 1½ hour sessions jam packed full of tips on how to take advantage of these seldom publicised rulings.