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| Case Studies |
Reading about financial planning techniques and strategies is great and can provide you with some great insight as to what is available and how these methods work. However, to see it in action helps you to understand the advantages and effects these strategies can have in real life. Please click on the links below to see what significant impact, if done well, these techniques can have. |
 Power Strategy #1 – The massive effect of return and fees in the long run
Power Strategy #2 – The power of gearing in the long run
Power Strategy #3 – The benefits of Salary Sacrifice
 Power Strategy #4 – Self Managed Super Fund advantage
Power Strategy #5 – The Transition to Retirement opportunity
Power Strategy #6 – Are you paying unnecessary interest |
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| Self Managed Super Fund advantage |
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Bob and Joan are aged 58 and 57 respectively and have recently restructured their Superannuation into a Self Managed Super Fund.
Bob is still working and had a super balance with his employers industry fund of $550,000. Joan is also still working and had a super balance of $285,000. They own an investment property worth $350,000 with no loan over it and also own a share portfolio of around $80,000.
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Upon setup of the SMSF, Bob and Joan rolled over their industry funds into the SMSF to allow for a specialised investment, setup through a financial plan with their adviser. They were also able to transfer the investment property and the share portfolio into the fund. They were forced to pay some capital gains on this transfer as this is treated as a change of beneficial ownership, however, the advantages of having this in the SMSF outweighed this cost in the long term.
Some of the advantages of this strategy:
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- Capital gains and Income assessed at 15% instead of 46.5% MTR.
- No tax payable once in retirement phase.
- Able to keep the shares they have some association with and the investment property they plan to move into, once retired.
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However, the biggest advantage in being able to choose the investment that the rollover funds go into, Bob and Joan are able to minimise the fees and maximise the returns, according to their own risk profile. Upon consultation with their planner, they were able to structure a porfolio that was only charged an ongoing management fee of 1.0%. This compares to the 2.3% they were paying on their industry funds. This amounts to a saving of $10,855 on fees in the first year alone!
Additionally, Bob and Joan have been advised that the new portfolio should outperform their old industry fund by approximately 3-4% a year, which again in the first year alone results in approximately $29,000 extra capital gain!
The last two points highlight the advantage of flexibility in using a SMSF structure.
 Back to: Financial Planning / Power Strategy #4 – Self Managed Super Fund
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| Next:Power Strategy #5 – The Transition to Retirement opportunity |
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