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5 ways to boost your super

Jan 29, 2009

  1. Super co-contribution - This should really be labeled "Free Money". If you earn less than $31,920 and put in a personal super contribution (to a maximum of $1,000) then the Government will match it dollar for dollar. So in effect your $1,000 becomes $2,000 for no risk whatsoever. At an average 7% return over 30 years, this strategy could generate an additional $189,000 for you in retirement.
  2. Salary sacrifice - If you are on marginal tax rates of 31.5% or above, then you should definitely consider salary sacrificing extra into super as the tax rate is only 15%. Those under the age of 50 can make an annual contribution of up to $25,000. This limit rises to $50,000 for those over age 50. Employ this strategy in the last 15 years of your career and you could boost your super by up to a million dollars!
  3. Reduce your fees - I know that you don't look at your super statement but if you did then you would see that you are being charged as much as 2.5% in commission, management and administration fees each year. It may only seem like a few thousand dollars per year but that can add up to close to $100,000 over a person's work life. That is a lot of money. And maybe even the difference in retiring a few years earlier or not.
  4. Property within super - So many people have told me that they don't believe in super. They tell me that property is "their super". That is all well and good. But why not have property within your own self managed super fund (SMSF)? After all you are effectively paying only 15% tax to own the property rather than up to 46.5% tax outside of super!
  5. Borrowing within super - Imagine if you had $200,000 in your SMSF and it could "borrow" (via an instalment warrant) a further $200,000 to get a $400,000 investment property. Any rent that you receive goes against that borrowing together with any super contributions that you may make. There are specific restrictions with this strategy and you should see an expert before trying to do it yourself.

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