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Trustee spotlight: from flipping houses to managed funds

Sam says when he set up his SMSF he ensured his investment goals and strategies would allow him to be a self-funded retiree.



Sam Smith, who prefers to remain nameless, opened his and his wife’s self-managed super fund when then-treasurer Peter Costello introduced a rule that allowed people to contribute $1 million each to their super fund and pay no tax on the funds once they were inside the super system.

“I was in equities and sold my holdings to contribute them to super because I felt paying no tax in the future was going to benefit me,” says Sam, who paid capital gains tax after selling his shares.

Sam had originally built wealth investing in property by buying, renovating, and selling houses. 

“I made a reasonable amount of money in the days when you could buy a house, fix the bathroom and kitchen, and paint it white yourself,” he says, adding that he was also investing in the share market at the same time.

Sam subsequently moved to Canada for work and took the advice of a friend who suggested he use the equity in his home to buy another house before he left. The idea being that he would rent out both while he was away, sell one on his return and clear the mortgage on the other. 

The plan worked, giving Sam a great degree of flexibility. So much so, he was able to retire at age 54 to pursue volunteer work.

“We were nailing down carpet and painting at lunch time with a plane to take us to Canada ready to leave at 3:00 pm. It paid off. But I'm talking about a time when you could pay $37,000 for a house. Things have changed a lot. That was 1970 and I sold it when I came home in ’72,” he says.

Sam’s wise saving habits also helped contribute to his next egg. “I started saving when I was 16. I had a very wise father, who said, "Don't go and buy flashy cars. Just remember, you're alive a long time and it's not much fun on a pension." So, I have always saved and I was able to put down $13,000 on my first house that cost $19,000,” he explains.

SMSF pluses


Sam says when he set up his SMSF he ensured his investment goals and strategies would allow him to be a self-funded retiree.

He says it’s important to ensure death nominations are updated on an ongoing basis.

While Sam invested in property in the past, his exposure to this asset class is achieved through real estate investment trusts now.

 “Over the years I have built a diversified portfolio and have invested in managed funds and listed investment companies,” says Sam.

“At this stage of my life I’m looking more for income rather than increasing my capital,” he adds. 

Sam says it’s important to only invest in assets you understand. “I don't deal in bonds, for example. I have two accounts, the super fund and a small investment company, through which I can take small positions in any interesting investments that come to my attention. Some of these do well and some don’t which can be useful from a tax perspective,” he says.

His advice to other trustees is to take a prudent approach to investing and invest for the long-term.

Would you like to be featured in SMSF News as part of our SMSF Trustee Spotlight Series? 

As part of our ongoing SMSF Trustee Spotlight Series, we regularly interview and feature SMSF Trustees that are active on the SMSF Community.  

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Funds related to this article: Wholesale Australian Property Fund

An income focused fund providing exposure to a diversified commercial property portfolio of high quality Australian office, retail and industrial properties often only available to institutional investors.

The Fund’s key aim is to provide investors with reliable income and long term capital growth.

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