Tuesday, May 31, 2011

Property Strategies 1 June 2011


One quarter of Self Managed Super Funds (SMSFs) struggle to make a positive return, a survey by management consultancy Oliver Wyman has found.

Annual management fees paid to accountants, financial advisors, brokers and the mandatory auditor – as well as amortisation of establishment costs – can come in towards $30,000 annually, and SMSFs.

And those with less than $500,000 in assets may not generate sufficient to pay these fees, the survey revealed.

Oliver Wyman is a member of the global Marsh & McLennan: “the world's leading insurance broker and risk advisor”.


Generally, if you’re earning around $80,000 your out-of-pocket contributions to own an investment property may only be around $20,000 over the next six years.

Here’s my video on the topic http://bit.ly/lERpQi


If you’re an Australian aged 65, the probability of you living to age 84 is 50%. Women will live a few years longer, men a few years less.

However if you're a married couple in your 60s there is a 50% probability that one of you will live to age 95!

However, and no matter when your “estate event” will incur, you need to consider how inflation can erode your income.

If you assume the long term rate will continue to about 3% per year and you need $60,000 per year to live now, in 10 years you would need $80,000, and in 20 years you would need $108,000!

So your retirement portfolio must be in inflation protected assets.

Which is why the very successful investment strategy that I share with my private clients has its focus on residential property.

If you want to know more about how to protect yourself against inflation, contact me – Bernard Kelly – anytime. (All you need to do is hit the return button on this email.)


There are storm clouds ahead for anyone approaching retirement, and who knows what will happen over the next 20-25 years?

In these uncertain times, when most of us don’t have enough for a comfortable retirement, you need to take evasive action to avoid being caught up as collateral damage in some widespread negative event.

We all know now – to our cost - that super funds have a fixation with equities, so diversification can be virtually important.

And we all know how inflation will impact on us in the decades ahead – precisely the same as it has ever done.

Until the Global Financial Crisis of 2007 hit us all, few of us had a Plan B for our retirement (and for those with one, it was “continue to work”.

Now of course that Plan B has become Plan A for many of us so let me suggest a new Plan B.

How about renting out rooms in your home?

At least with a plan – any plan – you are less exposed to becoming collateral damage.

If you would like me to help you consider your options, feel free to contact me – Bernard Kelly – anytime.

I‘m Australia’s Retirement Strategist®.


In America, it is now predicated that their Medicare program will be insolvent by 2024, and that funds held aside for Social Security pensions will be exhausted by 2036.

The good news for us here in Australia is that there will now be an on-going realisation that we need to provide for ourselves, as governments worldwide are no longer capable of funding ample retirement incomes for everyone.

But most of us are still floating down the river of denial.

I am sure that “the pension” will remain as the ultimate backstop for the truly poor, but if you own your own home and had a decent education, my feeling is that the criteria to be paid the pension will be framed against you.

We are seeing this already, of course. For example, for a married couple on the pension, when you turn 70 your second car is considered unnecessary, and your pension is shaved.

If you want me to help you prepare for long term financial security, feel free to contact me – Bernard Kelly – anytime. My mobile is 0414 778 518


The US housing market collapse had its genesis in 2002, when George Bush took action to allow everyone to own their own home. At the time only 7% of the poor did.

So he had HUD (the government agency for Housing and Urban Development) guarantee loans for new home buyers.

Now at the time there was a national program in place that only required a 2½% deposit and then the banks would lend the balance. So what happened was that property developers “left behind” 2½% of the purchase price as a deposit – in the name of the buyer.

So new home buyers didn’t have to contribute one penny, and then the government agency would guarantee their loans.

This lent to a building and lending frenzy, with Wall Street selling off huge chunks of these “government guaranteed” mortgages.

By the time that HUD put a stop to these games, 22% of the poor had purchased homes. That was in March 2007 when it withdrew its guarantee.

Suddenly all those chunks of mortgages out there didn’t have a government guarantee, and when the financial community realised that many of the borrowers would never be able to afford to pay off their mortgages, these mortgages became virtually worthless (as in America, borrowers are free to walk away from mortgages). Hence the global financial crisis.

And even to this day, across America, there is still in excess of a year’s supply of new homes.


Nothing is sacred from the claws of a desperate government, as we saw last year in France and in New South Wales and now in Ireland:

Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the Irish government has announced that it will now tax private pension savings.

This means Ireland is now following in the footsteps of a rather ignominious list of nations like Argentina and Hungary attacking private superannuation funds.

New South Wales was a bit more subtle last year when – for similar reasons – it introduced an “anti-fraud” home buyers’ tax – now thankfully being repealed by the O'Farrell government.

The Irish government has decided that the easiest, most concentrated pool of assets to find is accumulated private pension funds.

So - could the government tax superannuation funds in Australia?

Well last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to take retirement funds from the public in order to pay off other debts.

And in the US, funds put aside for government funded pensions have been raided for years and Congress routinely ‘borrows’ from Social Security to make up budget shortfalls

The moral here is to ensure that your retirement assets are diversified.



“This is one of the particularly dangerous months to speculate in stocks.

“The others are July, January, September, April, November, May, March, October, December, August, and February.”

– Mark Twain 1835-1910


In our next issue, I’ll keep you up-to-speed with what’s happening with investment properties.


You can now buy my manual “37 case studies of Profitable Hobbies for immediate application” at

At $19.75, it’s excellent value if you think you’ll be needing an additional source of income at some stage.


I use this for current news – as part of my social network tools


Go to www.facebook.com/propertysuccess




Bernard Kelly www.retirelaughing.com mobile 0414 778 518
Australia’s Retirement Strategist®

“expect to reap an extra $449,999* when you’ll really be needing it”.
PS As I don’t spend my advertising budget on traditional media, I’m able to pay you $5000 for successful referrals

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


Following my own advice, I have now established my own “profitable hobby” – a webhosting service. Go to


and also


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