SELF HELP

SELF MANAGED SUPER FUNDS

There’s no doubt, people like the idea of control over their investments, including superannuation. The latest statistics show a continued increase in the number of self managed superannuation funds — and a growing interest by these funds in property assets.

However, tread carefully when it comes to buying property through a super fund, especially the type of properties being marketed, or targeted, at SMSFs.

Typically these properties are part of large development projects which have no proven track record or truly independent evidence of likely returns.

We also frequently hear of developers paying finders fees for third party introductions to buyers, such as from an accountant or adviser. Unfortunately, these introductions can then become more about earning a fee than about the long term returns and bone fides of the asset being purchased.

Property is also often at its best when the capital gain is leveraged to help finance another purchase and so on as a portfolio grows. With a SMSF this is harder to arrange but can be done. However, with a potentially overpriced and under performing property asset in a SMSF, it becomes impossible — not to mention the adverse impact on retirement finances.

Until next week,

Jock Bing