Set and forget through super
Sam is the CEO of financial planning firm Henderson Maxwell and host of Sky News Business’s Your Money Your Call – Super
Jody, it sounds like you’re truly living the lifestyle and financial dream. You’re not paying a cent in tax from your super and you have plenty of money to supply you with an income stream, most probably for life.
Having spent a lot of time surfing my way around the Indonesian archipelago, I can attest to the beauty of the place and many others just like it, so good on you!
The other important aspect to your situation is that because you spend a lot of time away from home, your request for a set-and-forget strategy plays nicely into the hands of investing most of your hard-earned dollars in superannuation.
I think this is good idea because in AustralianSuper it’s well invested, has performed well and is a low-cost option. Let’s not fix what ain’t broke!
I manage self-managed funds for clients with similar amounts and they enjoy the transparency and flexibility of the SMSF structure, not to mention the potential to invest in property. You’re probably even not an Australian resident for tax purposes if you spend so much time overseas so an SMSF won’t be recommended, as central management control needs to stay in Australia.
Your needs are really simple. Despite having five times the average amount in super at retirement it doesn’t mean you have to have more complexity. I’m a big fan of keeping things simple. The same applies to your share portfolio. If I were you, I’d probably sell it down and make a non-concessional contribution to super (of up to $300,000) and potentially use a concessional contribution or part thereof if you have a capital gain on the sale – this will keep the CGT to a minimum. Alternatively, you can sell progressively across a number of financial years to lower your taxable gain. It’s important to seek advice from an accountant on this point.
Leave an amount you feel comfortable with as a cash buffer for emergencies and put the rest into super, where it will be managed by AussieSuper. Managing the shares yourself will require more work and expertise and your lifestyle sounds more like a priority than sitting in front of a screen trading shares.
One final point I’ll make relates to the $1.6 million pension balance transfer cap. I’d suggest ensuring that the super is split between you fairly evenly so that one partner doesn’t hit that cap.
This can be easily done given your age and the contribution levels available, and because you’ve already attained a condition of release you can take money out of one person’s account and put it into the other’s (up to $300,000 each as a non-concessional contribution using the three-year bring-forward rule) to rebalance the amounts.
Just make sure your binding death nominations are kept up to date, your wills and powers of attorney are complete and available to each of you and other family members. Apart from that, let’s keep it as simple as possible and keep the wind in the sails.