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Date Published : Tuesday, March 25, 2008
Changes introduced to the superannuation savings account scheme have increased returns significantly in the year that they have been in place, according to a report.
The Howard government introduced significant changes to the super funds system which now allows consumers to borrow to invest in direct property and shares, creating the potential to magnify potential gains but also potential losses.
Under regulations from the Australian Taxation Office, all consumers with a savings account ready for their retirement can borrow a personal loan to invest into property, in order to maximise their returns and nest egg for retirement.
However, experts have stated that many consumers could suffer as a result of the fluctuating financial climate and slowing property market.
AMP financial planner Mark Borg told the Adelaide Advertiser: "It's the most exciting space in the superannuation area at the moment.
"I can see many people getting into this, but my fear is that spruikers will probably get people into vehicles they may not understand."
Borrowed money can now be used to buy any allowable asset, such as direct property, managed funds or shares. However, costs associated with this, along with fluctuating interst rates and other financial variables, could leave many homeowners exposed to further debt troubles.
Mr Borg added: "Most Australians have the majority of their personal wealth in residential property, so to jump into super too really leaves them exposed."
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