Why Invest in Superannuation?
Superannuation is an extremely tax-effective investment structure that helps to save tax and build a significant amount of wealth for the future. Typically, the tax rate on contributions is only 15%, but once inside super, the earnings are taxed at 15%, which is typically much lower than the tax rate on income received in your own name.
The kicker, once you convert to an account based pension when you stop work after age 60 (or continue working to age 65) you can convert it to a tax-free income stream. Yes TAX FREE!!! How good!
How We Help
At The Bayside Investor we will work with you to determine your risk tolerance and recommend a portfolio of growth (higher volatility, higher return) and defensive assets (lower volatility, lower return) assets to suit your age and goals.
Within superannuation we can assist to build a diversified portfolio of shares/companies across Australia and Internationally (including USA, Europe and Asia) as well as Property (think Commercial Buildings, Industrial Warehouse and Shopping Centres) and Infrastructure (think Prisons, Toll Roads, Airports, Telecommunications and Utility assets).
As you approach retirement, defensive assets (Bonds, Fixed Income, Cash Investments) become even more important. We will structure your portfolio so that your pension payments can continue through market cycles by holding an appropriate amount of your Super/Pension in Bonds, Fixed Income and Cash investments.
Understanding Superannuation
It is also important to understand the different types of Superannuation contributions. Types of Concessional (before-tax) contributions include:
- Superannuation guarantee contributions (SGC) or employer contributions – these are amounts that your employer contributes – typically 12% of your salary.
- Salary sacrifice contributions – when you elect to voluntarily contribute a portion from your salary to super. Can be a % of your income or a fixed amount, eg $100 per pay cycle.
- Personal Concessional Contribution – when you make a lump sum contribution to super and claim a tax deduction. Can be useful when you have very good savings of have incurred a capital gain as this can allow you to reduce your taxable income.
The current limit for concessional contributions is $30,000 p.a. (effective 1st July 2024) but if your superannuation balance is less than $500,000 effective June 30 of the previous financial year, you may be able to use up unused concessional contribution amounts for the previous 5 years.
The other common type of superannuation contribution is a non-concessional (after-tax) contribution. This can be an effective way to get additional funds into the low-tax superannuation environment without paying tax.
There are other strategies that we may consider including utilising the Government Co-contribution for low income earners, Spouse Contributions to super (typically when one spouse is on a low income) or Spouse Contribution Splitting (when one spouse has a much higher super balance).
Strategies around getting the most from your superannuation can vary significantly depending on your income and life stage. We have a policy of no silly questions so feel free to get in touch today if you would like to know more.
What Else We Do
Call Mark
07 3524 8505
Email Mark
hello@thebaysideinvestor.com.au
Visit Mark
Ormiston & Coorparoo (By Appointment) 26 Raby Esplanade, Ormiston, QLD 4160
