Unless you live on a different planet, you have seen many articles about the changes to superannuation that took place on 1 July this year. There have been so many, in fact, that we declined to overload you with even more. Now the dust is settling, our view is that no matter what changes occurred in the superannuation space over the last 20 years (and much did), one thing remains inviolably constant.
A superannuation fund is not an investment; it is purely a vehicle within which to grow financial assets with tail winds made possible by favourable tax treatment at both the accumulation and draw-down phases.
The whole purpose behind superannuation arrangements is to provide money for use in retirement; there are associated benefits within these arrangements (e.g. related to life insurance) – but the main focus has traditionally been on adequacy in retirement.
Australia’s retirement savings are among the largest in the world; accordingly, they have been a target for successive governments to ‘tinker’ with over the years and the tendency, in the last decade in particular, has been to reduce the tax-driven incentives to save.
Countless financial experts have endeavoured to calibrate the ideal amount to accumulate as the quantum from which to draw down in retirement; many years ago, the government actuary stipulated that 11.7 times one’s final salary was the correct number (to generate 75 per cent of final salary); in the US, some mathematicians advocated 20 times final salary (on the assumption that by drawing down no more than five per cent per year, the money should last way beyond life expectancy).
Now, however, with the 1 July changes placing new caps on pre-and-post tax contributions (among other limitations), it will be difficult, if not impossible, to achieve – within superannuation alone - the sum needed for a retirement income anywhere near one’s final, pre-retirement salary.
It stands to reason, therefore, that investors will also need to accumulate assets outside superannuation if they are to reach desired goals. And achieving these goals will rely upon sound investment principles - and this is the inviolable constant. Ultimately, it is investment skill that builds wealth – irrespective of tax incentives.
The team at Palmer’s understands the ramifications of being a dependable investment resource and they know that there are vehicles, in addition to superannuation funds, that are able to maximise investment growth. A prime example of this is the Palmer Discretionary Account (PDA). Its attraction is that it works extremely well both in the form of a self-managed superannuation fund (SMSF) as well as a parallel, non-superannuation structure.
Smart investors use PDAs because they have full control of the arrangement while, having agreed to objectives with their Palmer Account Advisor, they outsource acceptable investment decisions to the utterly reliable Palmer team to implement.
If you haven’t yet explored the major opportunities that such a discretionary account can deliver to you (whether investing pre-retirement or, indeed, in retirement already) do yourself a favour and discover the substantial benefits sooner rather than later. It costs nothing to have a chat and it just may be a smart thing to do now that the July 1 date has, thankfully, passed into history.
Simply phone (NSW) 02 9233 2433 – (VIC) 03 9601 6800 or email jps@jpalmer.com.au
Palmer people are not paid by commission and your Senior Client Advisor will therefore give you an unbiased point of view. With a no-obligation chat, you’ll have everything to gain, including why at least one Palmer Discretionary Account could be perfect for you.
Disclaimer & General Advice Warning
This publication has been prepared by Joseph Palmer & Sons (ABN 29 548 490 818) an Australian Financial Services Licensee (AFSL 247067). Whilst the information contained in this publication has been prepared with all reasonable care from sources, which Joseph Palmer & Sons believes are reliable, no responsibility or liability is accepted by Joseph Palmer & Sons for any errors or omissions or misstatements however caused. Any opinions, forecasts or recommendations reflects the judgment and assumptions of Joseph Palmer & Sons as at the date of publication and may change without notice. Joseph Palmer & Sons, their officers, agents and employees exclude all liability whatsoever, in negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law. This publication is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Any securities recommendation contained in this publication is unsolicited general information only. Joseph Palmer & Sons are not aware that any recipient intends to rely on this publication and are not aware of the manner in which a recipient intends to use it. In preparing our information, it is not possible to take into consideration the investment objectives, financial situation or particular needs of any individual recipient. Investors must obtain individual financial advice from their investment advisor to determine whether recommendations contained in this publication are appropriate to their personal investment objectives, financial situation or particular needs before acting on any such recommendations.