March 17, 2016

No such beast as an ‘SMSF-qualified’ property

For instance, Australian Securities & Investments Commission (ASIC) recently raised concerns about the marketing of properties as “Self Managed Super Fund (SMSF) qualified” and “SMSF friendly”. The regulator is understandably concerned that the promotions suggest that a category of property exists that is particularly suited to SMSFs. There is, of course, no such category of property. Whether a piece of real estate is an appropriate investment for an SMSF much depends on the circumstances of the fund and its members, whether the property is a worthwhile investment and, critically, a fund’s mandatory investment strategy. Further, SMSF trustees should only accept […]
March 10, 2016

How to make friends with your credit card

The Thailand package was only $500, but Simon, having just paid his car rego was broke so he decided to pay for it using his credit card. However, after adding airfares and travel insurance his credit was maxed out before the plane left the ground! Simon’s situation is common. We easily justify using credit for things we know we shouldn’t, but temptation is cruel, often irresistible. According to “Using credit cards allows you to do things and see things and experience things that you really have no right to be able to.” Once in Thailand, Simon had to pay […]
March 10, 2016

Sequencing risk: the order of things

As financial advisers, we talk a lot about risk, so what is sequencing risk? Let’s begin with an example… Jennifer and Sue each contribute $20,000 per year to their superannuation funds for 10 years. They both earn an average return of 5% per annum, after tax and fees, and from Years Two to Nine they earn identical returns each year. The only difference is that Jennifer’s portfolio returns 8% in the first year and -8% in the last year; whereas Sue’s returns are -8% in Year One, and 8% in Year Ten. This doesn’t seem like much of a change, […]