I want to set up a Discretionary Trust but my my accountant is suggesting that I set up a Self Managed Super Fund- I wonder why he would suggest that and should I insist on what I want.
Eve100
Ask him to explain why he prefers the SMSF.
Are you within 5 years to retirement?
What are your investment goals/plan?
you might need both. a superfund will beno good for holding property that you need to borrow for as superfunds cannot borrow.
Firstly ash your accountant why they are suggesting that. If it doesn’t make sense, get a second and thrid opinion.
Terryw
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As the previous 2 posts mention you cannot compare like with like as they are 2 totally different beasts and both perform different functions.
If in doubt go and get an alternative opinion or point of view.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
The comments in this forum have offered you some good advice. Here is the crux of it as I see it. Your advisor will make money helping set up and administer a SMSF which is a form of a trust fund. If you are in to trading shares / Options etc and have a profitable system a SMSF can be brilliant. Alternatively if you put a few hundraed grand to put in or role into a SMSF then that could be good too. But if you buy property in a trust you instantly lose the power of leveragea nd this is why we all love property. It is not so much about the land, or the building as it is about hte fact that you can use other people money. Finance Strategy therefore is what property is all about. Find a Finance Strategist who understands trusts and can also recomend a specialist advisor who will listen to what your reallyw anting to do.
Good Luck
Karm
Thank you for that advice- I will keep asking questions.
Eve
Karm
Why do you loose the power of leverage if you buy in a trust?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsThe statement is not quite correct. In general trusts can borrow money.
Superfunds are prohibited from borrowing money. Therefore the trust that is estabished for you to manage a Self-managed Superfund will not be permitted to borrow money. Therefore all leverage is lost.
The principle advantage of Superfunds is the low rate of taxation. However, not being able to borrow money renders them uncommon vehicles for property investing. The ability to put up only a small amount of the purchase price and borrow the rest (Known as leverage) is a major benefit of investing in property.
Is that more clear?
I think Karm is referring to the Trust Deed required to establish a SMSF when he refers to Trusts and Super in the same sentence.
Also i think you will find the prime reason people invest money into Superanuation is to provide an income in their retirement rather than just for a quick tax reduction.
Although i have come across Financial Planners who sell it on the basis of this and this alone.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Sorry all, I’ve been away for a few days break. Yes I was referring to a SELF MANAGED SUPER FUND when I said you loose the power fo leverage when using a trust. I can see how it is confusing when reading over what I had written. About 80% of the investors I deal with use discreationary trusts, a few use Hybrids for more creative approaches. Generally only the beginers buy in their name. Discrationary Trusts are certainly somehting all investors need to understand and explore, My advise is find an accountnat who understands property (one who invests in poroperty themselves.)
CheersKarm
Thank you – that makes it a lot clearer .
eve100
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