DO YOU HAVE MORE THAN $200,000 IN CASH IN YOUR SMSF?
THINK ABOUT THIS!
Current bank interest rates at an historic low! This is having an adverse effect upon SMSF cash or deposit investments.
WHAT TO DO ABOUT IT?
Review the earnings from cash or deposits using a return of gross 3% per annum;
For example; If $250,000 @ 3% p. a. for the next 15 years, the outcome will be $ 391,857 or a net gain of $141,857 if you have not withdrawn a cent. You can use this calculation to pro rata what is the likely outcome further on, if this rate persists – which is most unlikely.
Compare this with investing $150,000 deposit and say $20,000 purchase costs, in a three bedrooms high quality dwelling, in a choice location for 15 years.
Using an interest rate of 5% per annum, a capital gain factor of 5% per annum, with rent at $600 per annum, the property will provide net equity in 15 years of $675,968. The property will remain cash positive after tax as long as interest rates remain below 7% per annum.
WHAT IS THE NET RESULT?
Cash will provide a net gain of say $141,000 at the very best interest rate outcome in 15 years.
The property will provide net equity after debt of at least $675.000 using an average capital gain 5% per annum, considerably below the actual outcome for the location over the past 15 years.
- strong growth over time
- increased income (cash flow) through rental returns
- taxation benefits through depreciation of building costs, fixtures & fittings plus expenses
- combined rental income and tax benefits that help fund the costs of the rental property, and
- the flexibility to sell, hold or even move into the property at any time
Additionally rental properties add diversification to our investments in superannuation, managed funds and/or shares.
IDEAL SMSF PROPERTY INVESTMENT
The best we have seen (open hyperlink)
Don Duncan F.A.I.M.
Don is the Principal Consultant at Meredon Consulting, with over forty years experience in developing successful residential property investment strategies, and extensive experience in the financial sector, Don is uniquely qualified to provide you with the best property investment advice available. He is supported by experienced property investment consultants in both Brisbane and Sydney. Don is a Fellow of the Australian Institute of Management, and a qualified Trainer of Trainers. In addition to this Don has also been an active member in the community, he was a member of Rotary International and Past President Toastmasters Territorial Council of Australia.