When it comes to smart investing, PCR Accounting & Advisory are the experts. We specialise in helping small to medium business owners make their money go further to minimise tax and maximise profits. One of those ways is borrowing from your Superannuation Fund to buy shares.
While there are currently only a few providers that offer this service, it is available. Before you start wondering ‘is this legal?’ The answer is 100% YES, but of course, you must do it correctly.
You can also lend money to your Superannuation Fund for the borrowing of these shares and even property. Part of this includes you lending the money at market rates and on market terms to the Superannuation Fund. You are also able to lend the money yourself from your home loan to fund this borrowing.
So, you might be asking, what does this all look like and what impact can it make?Before I begin, I will stress that a Self-Managed Superannuation Fund is required for this, and having a knowledgeable and ethical accountant to assist you is also highly recommended.
Now, let’s do some comparisons.
Let’s assume you have a $300,000 beginning balance, with Yearly Contributions of $25,000 between a couple. This investment strategy is going to be high growth, so we’ll also assume 10% returns p.a.
Table of Comparisons
$300,000 in Super, $25,000 in Contributions, Investment strategy is high growth.
| Case | Net Balance | Outside Super Benefit |
| $30,000 Borrowing | $ 350,677 | $ 825 |
| $60,000 Borrowing | $ 351,850 | $ 1,650 |
| $90,000 Borrowing | $ 353,022 | $ 2,475 |
| No borrowing. | $ 349,505 | – |
This is after 12 months. The total benefit over 5 years can look like this:
| Case | Total Benefit after 5 Years |
| $30,000 Borrowing | $ 8,763 |
| $60,000 Borrowing | $ 17,527 |
| $90,000 Borrowing | $ 26,290 |
Here is another case where we have $200,000 beginning balance, Yearly Contributions of $15,000 and a high growth investment strategy assuming 10% returns p.a.
| Case | Net Balance | Outside Super Benefit |
| $20,000 Borrowing | $ 231,292 | $ 550.00 |
| $40,000 Borrowing | $ 232,073 | $ 1,100.00 |
| $60,000 Borrowing | $ 232,855 | $ 1,650.00 |
| No Borrowing | $ 230,510 | – |
This is after 12 months. The total benefit over 5 years can look like this:
| Case | Total Benefit after 5 Years |
| $20,000 Borrowing | $ 5,842.4 |
| $40,000 Borrowing | $ 11,684.47 |
| $60,000 Borrowing | $ 17,526.71 |
It’s important to note that every circumstance is different and the best way to approach borrowing from your Superannuation Fund to buy shares is by having a strategic plan tailored to your financial goals so as to avoid making any mistakes in the process.
Shares can sometimes be a tricky business, which is why having a professional assist you with your investing is the best choice. As a team of expert advisors, we know how to make sure you neither overestimate nor underestimate your investment capacity and minimise as much risk as possible.
We’ll give you peace of mind by making sure everything is clear and in a structured plan so you can feel confident you are making a financially sound decision.
If you’d like assistance with borrowing from your SMSF to buy shares or are seeking advice regarding your investments in shares, call PCR Accounting & Advisory today on 03 9847 7516 to see how we can put you on the path to financial success.
Owner of PCR Accounting & Advisory, Peter Marmara-Stewart is a top-tier accountant and financial advisor dedicated to helping clients reach their business goals and achieve financial freedom. Peter is highly regarded for his client-focused approach and entrepreneurial spirit, catering to a diverse range of professionals across a wide scope of industries all across the country. Peter’s expertise can help you plan effectively, set goals, maximise profits and protect your assets. Get in touch today on (03) 9847 7516.
