Meet Tracey…

Tracey and her daughter Michaela are a mother-daughter power team who work together in a florist Tracey set-up on her own twenty years ago. It is a successful business and has grown immensely over the last decade as they have won a few key commercial contracts. When Michaela finished school she joined her mother in the business. Tracey had been contributing to superannuation since it began in 1992, and when Michaela joined the business she set up a fund for her.

With the business going well, Tracey decided she wanted more control over the decisions on how she invested her superannuation, which was her third largest asset after her business and her apartment.

Tracey got to talking to one of her regular clients who was a local financial adviser. After reflecting on their conversation, Tracey made an appointment with him to discuss setting up a self-managed super fund (SMSF). As her super balance was close to $500,000 and she was willing to put time and effort in to the management of the fund, it made sense to her. Tracey was used to managing a business so the administration of the fund as a trustee came easily to her. As she now had more control, Tracey became a lot more interested in the investment markets and is expanding her knowledge. She regularly reads the newsletter her financial adviser sends her with the latest updates and information. Over time her fund grew at a pace she was happy with.

Tracey and Michaela decided to keep Michaela’s superannuation with an industry fund because she was young, had a low balance, and was not interested in monitoring and controlling her own super fund while she was busy studying, travelling and working in the business.

Last year, the space Tracey leased for the florist went on the market. The business was going well and a lot of goodwill was attached to its location. Tracey made an appointment with her adviser to discuss how she might go about buying it.

The adviser suggested she use some of the money from her SMSF to buy half the property and buy the other half of the property with equity in her apartment. In doing this, when she pays commercial rent, half goes into her super fund and half to herself. As this is a business property, the medium term plan is, after further contributions to the super fund, Tracey and her adviser will discuss the option of using the SMSF to buy out her share of the property.

Tracey is happy having greater control over her financial future but she would not be able to manage the fund, keep up with changing legislation, understand the investment market and be aware of tax implications without the assistance of her adviser. Tracey’s adviser provides a lot of assistance and is very proactive in communicating with her, including reminders about reviewing her SMSF strategy and investments.

If you feel an SMSF may be the right strategy for you, or you want assistance with your existing SMSF, contact us to start the discussion.