How some low balance SMSFs are outperforming super funds by more than 300% this year

Since Covid-19 began impacting financial markets and the economy, financial services research company, Rainmaker Information, reports that almost $300 billion has been decimated from Australia’s superannuation funds. 

This outcome has been endorsed by major super funds and investment consultants.

It’s difficult to comprehend the significance of a figure that size until you understand that many Australians have lost between 10 - 18% of their retirement savings over the past six months.
 

Bucking the super-loss trend

But while many industry, corporate, retail and government super funds have struggled to make up for losses, SMSFs are providing average Australians opportunities to recoup and significantly increase their super savings over the coming year and long term.

Zaki Ameer, founder of property investment consultancy, DDP Property, says that by moving super into a Self-Managed Super Fund, people can use their money to purchase, and profit through, investment property.

“In regular funds, your savings are usually invested in what we call unleveraged assets. Things like shares, cash, bonds, property funds and other fixed interest investments. Even if you leave out the Covid-19 plummet, these funds only make around 6% a year in the long run.

With a self-managed fund, you’re able to make your money work in smarter ways for you. A lot of SMSF owners are using their balances as leverage to borrow from banks to buy investment property. They’re seeing far greater returns, even in the first year.”
 

(Disclaimer: Buyers should seek independent financial advice to ensure a SMSF is right for their individual financial circumstances)

How much do you need to start an SMSF?

Ameer says that this strategy doesn’t require a large SMSF balance and that the approach has been working well for clients with $100,000 - $150,000 in their SMSFs.
 

Based on average performance over the past decade, he says a property worth $400,000 today will be valued at $750, 000 in another 10 years, returning a capital growth of $35,000 every year. 
 

“So, in twelve months you not only recoup any COVID losses, you’re going to see a much higher return than money wasting away in a super fund for another year.” 
 

Ameer said first-time DDP clients buying new properties also receive $25,000 to top up their SMSFs through their exclusive Cashback offer.
 

“Or, like some of our more entrepreneurial clients, they can use the cash-back as a deposit for another property and then receive another $25,000 to do it all over again.”

Example Returns Leveraged Asset (SMSF) vs Unleveraged (Regular fund) over 12 months

Based on these figures, the average 12-month return of $24,000 on a property investment through an SMSF would be 313% higher than $7650 return on unleveraged assets in a regular fund.

Disclaimer: Buyers should seek independent financial advice to ensure a SMSF is right for their individual financial circumstances.







For more information, please contact:
 

Olivia Parker

Head of Marketing & Events

Dream Design Property

M. 0428 255 637

E:   olivia.p@ddpproperty.com.au
W: www.ddpproperty.com.au