Monday, March 01, 2010

Retirement Strategies 1 March 2010

the slab is down on a new investment property in Ipswich (right)



Most of us have played Monopoly at some time. But most of us don’t stop to think that you can’t win if you rely on your salary alone i.e. that extra $200 whenever you pass Go.

The only way to win is to buy property, collect rent, buy again, collect more rent, and continuously repeat the cycle.

Now our role at is to help our private clients secure their future through investing in property.

We educate clients to understand that property investment is nothing more than a cold blooded, clinical financial analysis. It has nothing to do with what it looks like, the colour scheme, or if you like it.

It’s simply a matter of offering an outstanding product in a growth corridor that will appeal to long stay tenants who want to live in that particular suburb.

Of course, if you locate your investment adjacent to an economic zone where there are solid manufacturing jobs, obtain the correct funding, structure the ownership correctly, plan for a maximum tax clawback, lodge a quantity surveyors’ report, arrange all appropriate insurances and update your wills, you do ever so much better.

That’s the level of professional support that we offer.

The Bottom Line is – do you think that you will be better off in 15 years if you have investment properties, or not?

So stop procrastinating – JUST START!


I’m told that if you paid yourself 4% of your super each year, and the balance earned 7% pa, it would last around 25 years.

However this nice linear model doesn’t allow for surprises – such as a new roof or a major health scare – nor does it consider the ravages of inflation.

The only solution for people in late career who don’t have enough for 20-25 years of comfortable retirement, is to create an investment property portfolio as quickly as possible.

Contact me – Bernard Kelly – anytime on and I’ll help you explore your options.


The longer that you’re in the property market, the better off you’ll be.

Because the growth curve becomes steeper over time, you’ll make more in year 11 than in year 10, and you make more in year 10 than in year 9, and more in year 9 than in year 10 etc.

I saw this reflected more precisely in an article about the beauty of regular investments.

The maths show that if you're 23 years old and invest $250 each month ($3,000 pa) and earn 8% pa, at age 65 your fund will be worth $985,749.

However if you wait until age 33 to start, and you put in $5,000 each year, at age 65 your fund will be worth only$724,753.

That's over $260,000 less – even though you were contributing an extra $2,000 each year!

The difference is explained by the power of compound interest.


There are a number of expensive consumer items (such as plasma TV screens or boats) that create instant feel-good emotions, but a few days later you silently ask yourself “did I really spend that much on THAT?”

Establishing a SMSF to hold property investments is probably another example of an expensive consumer item.

A SMSF costs around $2000 to establish (which is why the lawyers are suggesting you go that route) with annual associated costs about $3,000 (which goes to your accountant).

Now those expenses are a good investment if you have $1,000,000 in your super, and it‘s managed by a major financial institution which would typically be charging you 2% ($20,000 pa). But if you’ve got that much in super, you would have already established your own SMSF.

However if you are Mr + Mrs Average, and your $200,000 is with a retail super fund (which charge around 1% pa i.e. $2,000 pa) then moving to a SMSF is not a good use of money.

But that is what the financial planning industry – and hangers on such as lawyers and accountants – is now promoting.

You’ve heard their pitch “use your super to buy an investment property”.

The advantages are said to be personal control, investment choice and control over expenses – all motherhood statements, but more applicable if
you’re happy to be share trader rather than a buy-and-hold property investor.

Remember, as banks may only take security over what they are financing inside a super fund, when they lend without recourse to other assets – either to a super fund or to an individual – they will only lend around 70%.

This obviously eliminates the superior performance (over shares) that property investing provides when you gear up to 95%.

And finally, most super funds are constructed for growth, not for dividend income, and they don’t have taxable income to benefit from negative gearing.

So to summarise – if you’re in your 50s, and don’t have enough for 20-25 years of comfortable retirement, the only way to catch up is to follow my very successful strategy of negative gearing on new homes, funded on the basis of negative gearing, purchased in your own name to take advantage of the available tax credits.


You probably know many people who need my experience and expertise right now.
Here’s the deal – you invite a few people to a lunch or after-work seminar, and I’ll present Retirement Strategies for Employees.

I’ll pay you $150 for your expenses, and a further $1000 for every participant who has me share an investment property with them.

About Bernard Kelly:

Bernard Kelly BEcon MBA CRPC Australia’s Retirement Strategist, is a highly sought-after advisor, retirement authority, thought-leader, author and radio commentator because he makes the complicated and mundane topics of investing and retirement fun! Bernard has over 20 years experience providing families with financial thought. He is the author of Live Your Dreams in Retirement, Property Investing for Couples, Goolwa by Breakfast and Raising Decent Kids into Substantial Wealth and publishes a fortnightly newsletter that reaches thousands of subscribers worldwide.

19 Prospect Street, Box Hill 3128 Australia. Tel 61-3-9899 8577 mobile 0414 778 518


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