Why Start a Self Managed Superannuation Fund – SMSF?

The number of SMSF’s created over the last 10 years has significantly increased where there is now more than 478,000 funds in existence with an asset value of approximately $439 Billion and rising.  It is the clearly the fastest rising sector in Australia.

It began with the baby boomers (those born between 1946-64) who wanted to take control over their retirement assets. They were frustrated with the lack of understanding of platforms, fund managers and the poor returns in retail Superannuation.

In the last 2 years there has been a rise in Gen X (born 1965 to 1980) starting SMSFs, these people have grown up with Super and have accounts that are over $100,000 and growing towards $200,000. They want to have more control over their assets and invest in areas that they are unable to in retail and industry funds.

Self Managed Superannuation can be an attractive retirement funding structure for numerous reasons including control, flexibility, choice of investments and greater speed in changing investment decisions (adaptation). You have the option to control and manage the strategies yourself or you can take total control and have little of the management by working with a team of SMSF Advisors, Financial Planners and Accountants. The power of the SMSF solution is that you have ultimate control of what advice you seek and the relationships you have with your advisors, however you must be willing to take on the responsibilities that being a SMSF trustee entails.  If you have a good advisor team who can guide, assist and educate you along the way and you are willing to learn then this can be a successful strategy.

Our team at McMahon Osborne Group can assist you in this matter, if you are interested in setting up a SMSF please contact Lynda Parsons to make an obligation free 45 minute appointment to discuss the potential of you owning your own SMSF.

Next week we will go into the benefits of having an SMSF.


The Fundamentals of Property Investment

Are you one of those people who would like to invest in property but don’t know where to start?  There are many factors to consider when investing in property, location, budget, etc.  To assist you in taking those first steps to unlocking your property investment future, we have compiled a list of some key fundamentals.

(a)   Strategy or plan– you must have one!  This is generally the single biggest asset you will purchase. It doesn’t matter whether it is your first investment property purchase or you are a seasoned investor – begin with the end in mind!

(b)   Choose property that is attractive to both tenants and owner occupiers– any property you purchase should be in really good condition, as new, have good sized bedrooms, adequate toilet numbers, off street secure parking and be positioned away from noise and main roads.  Most importantly it must be surrounded by good infrastructure such as transport, employment, shopping and leisure facilities. These tend to be found close to a CBD.

(c)    The best property in the best location– some properties make better investments than others. Your goal should be to pay the right price for the right property, not just the lowest price on any property. We see many property investors make the potential mistake of buying in their own area “just to keep an eye on it”. It may not be the best area to have an investment property, both for growth & quality of tenant, and this is potentially why so many people stop at only one investment property.

(d)   Buy blue chip– If a property seems too good to be true – it probably is. Cheap properties are usually cheap for a reason – usually as there is a lack of demand in that area and they lack the qualities listed above or there is an over supply in the area. Remember that blue chip will mean different things in different areas – that could mean one bedroom units in one area and 4 bedroom houses in another. I recently heard someone say “Do you want a property investment that is a bargain or one that performs?………..”

(e)   It is all about time in the marketMany people try to wait until the market is at a low before buying. The successful long term investors know that timing the market is for speculators, not investors. If you have done your research and can afford to buy and hold on to your asset, now is always the right time to buy.

(f)      You don’t have to sell to profit-Selling a property to realise a capital gain will incur costs and tax. By refinancing you can access the profits made on the property (equity) to continue investing in property to achieve your documented goals.

(g)   Get a good property manager A good property manager will ensure you get a reliable tenant who pays market rent.  Don’t be afraid to change between 6 month and 12 month terms depending upon the market. Also, you and your property manager must set a rent that is realistic. Overpriced rental properties will generally not get rented, regardless of how long you wait. Remember 52 weeks @$385 per week is better than 48 weeks @ $395 per week!!

(h)   Build a team of professional advisors You can’t do everything yourself. Surround yourself with professionals who are experts in their field – accountant, financier, property manager and where possible ensure that they property investors themselves.

For a Free 1 hour consultation on how we can assist you with your property investment, please call Lynda on (03) 9744 7144 or email lynda@mcmahonosborne.com.au

You know what you do BUT do you know what business you’re in?

What business are you in?  How often do you get asked this question and more importantly, how do you answer it?

If you are looking to grow and improve your business you need to think very carefully about how you answer this.  The great Aussie habit is to pigeon hole ourselves and, without even realising it, miss many opportunities.  You may not know it but by saying “I’m a ……………..” multiple opportunities may be walking out the door.

Let’s use a couple of examples to explain this.

  1. A stranger walks up to you at a party and says “so what do you do?” and you reply “I’m an accountant”.  You have a nice chat and head off.  Unbeknown to you this stranger is about to receive a $5M inheritance and has never had money like this in his life, so is desperately seeking someone to help with this concern.  If you answered the question “We’re specialists in helping people and business create a secure financial future”, how would the conversation change?  Would that create intrigue?  Would the stranger want to ask some questions?  Is it possible you’ll see the stranger next Thursday in your office as a client rather than a stranger?  YES, you do accounting work, you do investment management and you look after self managed superannuation funds but WHAT BUSINESS ARE YOU IN?
  1. Your business sells photocopiers and installs them.  One day during an installation one of your team members is having a regular conversation with the receptionist who asks “How long have you been doing this?”  The installer replies “3 years”.  A polite conversation happens and the installer leaves.  Compare that to the answer “for the last 3 years I’ve been working within this business of providing document retention systems”.  The receptionist is pricked by this and asks “So could you help us store all our old records out in the shed?”  As a business providing document retention systems, whilst you don’t currently do it, you might have just stumbled onto an opportunity that fits within your business model.  You could possibly discover that a number of your current clients would like the same service, maybe they want the storage to be paperless or on line, who knows where it ends?  You don’t have to take every opportunity, but discovering opportunity provides choice and potential to strengthen your business model.

So ask yourself “What business am I in?”  There are thousands of electricians, concreters, computer repairers, chemical suppliers and handymen.  Look hard at your business – what do you do so well that sets you apart?  What problem do you solve?  What itch do you scratch?  See your business in a different light and be amazed at how others will then view you and your business.

Avoiding Procrastination Tips

Breaking News: we only have 24 hours each day!!

Procrastination can rob us of some of those precious hours every day, week and year. It can cost us our team, our customers and our families and can contribute to smaller problems becoming larger and costly to fix.

Here are some simple tips to avoid procrastination:

  1. Make a commitment to yourself to stop procrastinating.  Better still, make it a mutual commitment between you and someone you really trust and don’t want to let down.
  2. Keep a log of every time you procrastinate. It is okay to slip now and again but a log will help you stay on track and change those bad habits!  (using a log works more than we really appreciate).
  3. Since fear is a powerful motivator, try associating procrastination with something unpleasant like losing your home, closing your business, losing your job or letting yourself (or someone you look up to) down.
  4. Use the correct procedure and systems for each job to create repetition and therefore comfort in completing tasks.  Break big tasks into small incremental manageable sizes.
  5. Hold back rewards until the job is done. Create pain before gain! Finish the next task – then get a coffee or take a break. Not only does this make your work more methodical and organised, but delaying something pleasant makes the reward even more enjoyable.
  6. Start small. Return that unpleasant phone call today; follow up that missing document immediately. Succeeding on the small things will help build your confidence and create the habit of doing things immediately. You will start to build a positive habit as a result.
  7. The ability to stop procrastinating will not change with one attempt. Like breaking any habit, keep trying and you will start to see change in yourself. Stick to tip #2.

Beat Procrastination

The Business Value Myth Debunked

It’s time to smash a myth about the value of your business.

All too often the comment is made “your business would fall over if you were hit by a bus, it has no value”.  This seems like a sales pitch to create concern, but let’s look at this from a different angle: rather than being negative to create alarm, let’s look at it from a positive angle with the business owner taking control of this issue.

“I add value to my business every time I take a step to improve the business, so, if I choose to move out of the business or take a step back, someone with an appropriate skill set and attitude can step into that space I created”.

Yes, it’s more words and doesn’t roll off the tongue or hit you in the face, but how much more powerful is this statement?

Does this make growing business value seem possible?  Does this make you feel in control of creating business value?

You do have the power to create business value.  It’s your choice – there’s no false promise here that you will create a business worth $10M tomorrow starting from scratch, but just take a moment to think about it.  How would your life be different if you took your business to a place where it had value?

People pay money to purchase a system that will generate income for themselves and their family.  The ultimate example often used is McDonalds – the most recognised systematic business in the world.  People pay $2M to earn an annual net profit of $300,000 for a McDonalds franchise because they are so confident that the system will provide this return on investment.

Let’s bring it all back to a less recognised example.  We know that people will pay money to buy a shop, let’s use a clothing shop situated within a shopping centre for example.  How do they determine value?   The purchaser makes an assessment of how much net profit they could generate annually using “the system” they will be purchasing.  They will then determine how many dollars they are willing to pay using that system to earn that annual income.  The system includes, location, point of sale equipment, brand recognition, relationship with suppliers, bookkeeping systems, marketing plans, team culture, etc.

The stronger the systems, the more the purchaser will be prepared to pay to earn that income as confidence and trust in the future earnings is higher – hence McDonalds being so valuable.

Look around at your business.  Where can you put in place a system that reduces the reliance on you?  Every time you do this you raise the value of your business and personal wealth.  Remember, this is not making you redundant in your business – just replaceable by a person with the right skill set and attitude when you make the choice to reduce your day to day involvement within the business.

For your FREE 1 hour consultation on how we can help you with your Business Development Strategies, call Lynda at McMahon Osborne Group 9744 7144. Don’t forget to mention our Blog.