- kum yin lau wrote:
Hi losty, your case made me really look at the numbers.
It's so simple it's almost idiotproof.
$9000 p.a. = $750 p.m. x 2 = $1500 p.m.
Accrued interest tax saved
$1500 $6.25 $31.25$3006.25 $12.53 $31.25
At the end of 15 years, the total accumulated is $744430.50
That doesn't include the tax savings.
Essentially, by each partner paying $130 – $150 per week into an smsf & not doing anything more except ensure it's in a high interest [daily rest internet acct will do it], by the time you're 50, you'll both have close to a million in cash.
Is that so difficult if you're earning $100K each?
KY
I can't see where you have taken out the 15% tax on the contributions. If the contributions are tax deductible to you (or your employer) then the superfund has to pay 15% tax on those amounts.
I also don't think you have deducted the ongoing costs of maintaining the fund.
Hi, the calculations go like this:
Contributions = $18000 [9K x2] x 25% [40% tax bracket – 15% tax] = $4500
That alone is enough to pay ongoing costs
Add employer contributions of $18000 [don't know how this part works out later]
The rest of it is accrued through normal compound interest.
Sure, 700K is not comparable to your Woodcroft home but look at the yield. Your Woodcroft home I would hazard a guess rents for max $450 a week? Take away costs & you end up with $360 pw = $18720
$700000 @5% interest = $35000 per year [in today's envt, you can get close to 7% p.a. on the daily rest calculations]
And bear in mind, to get there, the couple would have contributed in real terms probably about 35-40% of the actual accrued monies. I'm not exactly sure, didn't do precise numbers.
I'll buy property only if I'm very sure that the yield >5% every year. I've been lucky, mine yield around 10% nett all in.
Remember the Manhattan Indians who sold Manhattan for how many dollars was it back then? Someone did tha calculations & proved that reinvested, the amount today would be the same as if they didn't sell.
Our problem is not we can't make money or buy houses, it's that we can't keep them. Super works precisely because we can't get at it!
KY
Property earns capital growth as well as rental yield
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Agree with JacM,
I don't think the simple ROI calculation is valid for super. Firstly, It is something I can not touch for 30 years, even though it has a value today, the real return is only realised when i withdraw it, and it won't be in today's dollar. Secondly, if you withdraw early, the fees and charges are so heavy that you automatically lose half of the book value immediately. thirdly, you still have to pay tax when you start withdrawing from super, so the 'saved tax' is only deferred, not eliminated, so the saved tax should not be part of the calculation.
anyway, what i notice is that my super's annual growth is not even enough to cover the annual management fees charged.
Any other comments/Suggestion please!
Hi danviv1, losty & young guns et al,
I'm not sure that you all have considered the super issue in depth. The reason your super went -ve is because your fund is weighted heavily in equities. And fees march on regardless of whether the fund makes any profit or not. What I'm suggesting is that one who earns enough to be in the 30-40% tax bracket has enough reason to just contribute cash into a smsf & let it roll & roll. The govt is doing a lot of the pedalling, why don't we take advantage of it?It's the same reason why -ve gearing works. That's why our property investments have been so productive. It's the very reason why I bought my 2nd house. And the 3rd. And the 4th.
The fact that you can't access your super until another 30 years should not deter you. And when the funds are withdrawn after 60, there's no tax. At least for now.
What I suggest is, do the numbers in a detailed manner first.
KY
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