Investors urged to consider alternatives to super
In light of the proposed budget changes to superannuation, investors have been urged to review the tax effectiveness of super and investigate other strategies.
According to bond manager Centuria Capital, the unlimited tax-effective super balances Australians have enjoyed look almost certain to end under the newly re-elected government.
General manager of Centuria Capital’s Investment Bond Division, Neil Rogan, said the federal election result will likely bring little relief to Australians under the proposed changes to super.
“Proposed changes to superannuation may have a significant impact on the retirement savings plans for many Australians and they need to consider alternative tax‐effective strategies,” he said.
SMSFs are taking notice and interest in investment bonds is spiking, Mr Rogan said.
“There’s no limit to the amount that can be invested in an investment bond, so for investors likely to hit the proposed $500,000 lifetime non-concessional cap, it is an option worth considering.”
”Investors can withdraw their funds at any time, but if they stay invested for 10 years, earnings are 100 per cent tax-free. Also, additional contributions of up to 125 per cent of the previous year’s contribution can be made each year,” Mr Rogan said.
However, he urged investors to consider their own financial position when reviewing their options.
“Every investor’s situation is different so it’s important to look carefully and assess the pros and cons of all investment alternatives.”