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Most of us know by now that a Self Managed Superannuation Fund (SMSF) is allowed to borrow under a ‘limited recourse borrowing arrangement’. Related Party Loans from a member (or other related party) to their SMSF can reduce the cost and complexity of a limited recourse borrowing arrangement, facilitate a transfer of funds into an SMSF that is not affected by the superannuation contribution cap restrictions, and create considerable income tax benefits.
This presents a great opportunity for investors to create considerable wealth within the concessionally taxed superannuation environment.
A tailored solution for the nervous investor...
Many of our clients have acknowledged investment in a share market trading at its lowest valuation multiples for decades and paying an average yield of 5.5% (excluding franking) has significant merit. However, having watched their portfolio’s value fluctuate dramatically (and mostly downwards) over the past four years, they are reticent to invest.
Thankfully for clients of FYM Financial, George Lucas, Managing Director of Instreet Investment Limited and a member of our Investment Committee, has a solution for nervous investors and has devised a straightforward but clever strategy whereby you can:
- get exposure to the potential upside of the ASX200 or US S&P 500 through Instreet Mast; and
- keep the bulk of your portfolio in defensive assets, such as bonds and cash (if preferred)
The nature of this investment enables you to capture the value of a market rally, whilst concurrently ensuring you have more than your existing portfolio value at the end of a three year period, irrespective of how the stock market performs.
...and if investing in Super you get the added benefit of maximising super contributions
With maximum super contributions reduced to $25,000 from 1st July 2012 this gives you the opportunity to maximise your investment savings within superannuation beyond the concessional contributions limits.
As always, should this article or current circumstances give rise to any questions, please do not hesitate to contact us:
p: 61 3 9629 9900
There are lots of headlines in the press about the Sovereign debt crisis in Europe but they tend not to provide a comprehensive outline of the core problem, actions taken and potential outcomes.
We have provided a 7 page report written by FYM Financial Investment Committee member Fred Strauss.
In September 2009, the newly-elected Greek Prime Minister revealed a 'blow-out' in the budget deficit and public debt of Greece. Nobody at the time realised that this would escalate into a sovereign debt and banking crisis that would engulf the southern countries of Europe and Ireland. And while the northern countries are in better shape economically, they are inextricably linked to the Mediterranean via a common currency, capital and trade flows. Banks in the north hold substantial investments in the sovereign bonds of the south, so the falling credit quality of Greece, Portugal, Spain and Italy are a problem for the whole Euro-wide banking system, not just those of southern Europe.
It is these links that force the 17 countries of the Euro to work together. But some 20 Euro summits later, progress is slow because national interests are competing with the interests of Europe as a whole. Euro-wide solutions have to be acceptable to 17 different governments – each with their own political agendas – making it a very difficult task indeed. We have seen numerous proposals put forward to stem the crisis, each seemingly a patchwork measure as member nations inch towards a unified solution where each country agrees to share some of the pain. Thus far we have had the European Central Bank implement a financing programme of LTROs (Long Term Refinancing Operations), the creation of the EFSF (European Financial Stability Fund), the creation of the ESM (European Stability Mechanism) and the recent proposal of a ERP (European Redemption Pact). Not surprisingly for a number of clients who don’t follow the situation daily the situation becomes more unclear with each new measure/body proposed to solve the crisis.
We thought it timely to give clients a recap of the causes for the debt crisis, its consequences, the components that have been developed thus far as solutions and what we believe is required to solve the crisis.
Our Investment Committee member Fred Strauss gives a detailed analysis of the situation.
On the 8th of May, Federal Treasurer Wayne Swan handed down his fifth budget. Termed the “Battler’s Budget” it announced numerous changes/deferrals to existing taxation policy, most notably for investors those regarding Superannuation. In the attached article, the Head of FYM Financial Planning, Sara Nicholls, addresses the extent of these changes and her thoughts about how they may affect you.
If any of the changes announced in the recent budget impact you or your personal circumstances or may affect the strategies you currently have in place, please feel free to contact us for further discussion.