Residential property has a proven track record as reliable security in fact it is the most favoured security for finance by the banks as is demonstrated by the interest rate offered as opposed to any other asset class and also the loan to value ratios offered. Yet this excellent asset class has been placed with major restrictions when it comes to one’s own personal superannuation fund. I will demonstrate that superannuation contributors who understand the merits of residential investment have been given a bum steer, in fact they have being robbed by the financial planning boards and policy makers.
Consider for one moment where all the superannuation investment funds are directed and then ask, who are the people with the most money and clout to direct where the money goes and then consider where the people are from who has the ears of the policy makers?
Well it’s easy; it’s the Fund Managers and the Stock Exchange, they are the ones who hold the clout. They have successfully cornered the nation’s massive superannuation savings. It’s the old story he who has the gold makes the rules.
Several of the worthwhile and creative ideas in the Financial Services Industry during the 80″s and early 90′s, were one by one stripped away. One idea that stood out from the crowd was the right of an individual with a personal super fund to use the prudent man rule in regards to their superannuation savings, and direct part of it toward a deposit to purchase residential property and establish their own property trusts which they personally owned and controlled, where all the profits remained with them.
This was a wonderful opportunity allowing the investor to maximise his super fund as well as providing taxation advantages personally via negative gearing on personal funds borrowed to finance the balance of the property purchase. This approach provided greater growth through leverage in a very safe haven.
For what valid reason was residential property scraped you may now ask
Looking back over the last 20 years of relative risk and performance ratios of residential property and different shares, especially in the light of the so called “Blue Chip Stocks” i.e. financial stocks that are no longer even trading, will have you scratching your heads.
The bottom-line is, it was pure corporate bullying and greed on behalf of the Fund Managers and the stock Exchange. Residential investors simply did not and do not have a voice; whereas the fund managers and the Stock Exchange have an army of lobbyists capable of removing any wall that stands in their way.
The Cold Hard Facts
The fact is the fund managers successfully achieved the irradiation of the best investment vehicle ever made available to small investors via their own superannuation savings.
The reason was quite simply that these investments were gaining rapidly in popularity and the Stock Exchange and the Fund Managers didn’t like anyone making money if it didn’t include them.
He Who Has The Deepest Pockets Wins
Just like our marvellous Westminster Legal system. In a court of law, it is not about justice who wins, it’s about he who has the deepest pockets wins. In this case it was he who had the deepest pockets to create the loudest voice to penetrate the policy makers who won.
This loud voice also echo’s through the media often right at the most beneficial point in the property circle for purchasing property.
As sure as night follows day, as soon as the property circle looks set to run, out from the wood work comes all the financial Commentators, offering their so called wisdom of why not to buy property now campaigns.
Of course these commentators are sponsored by the fund managers. It’s time to ask the question why can’t we use our savings via superannuation to invest into our own residential property portfolio’s, utilising all the additional benefits of taxation and safe leverage, after all Residential property is still the banks most favoured security, whilst the world’s population continues growing at an ever faster rate, which is currently adding an extra 1 billion people on the planet every 15 years ,and whilst demand for affordable housing continues to outstrip supply, due to construction delays caused by erroneous government charges on new developments and interference from the local authorities.
Residential stands Up
Then residential property located within the boundaries of attractive politically stable and economically prosperous nations, purchased at the right price, is indeed a most worthy investment consideration and should be re-instated as a viable leveraged investment tool to create wealth and security via ones super funds, within appropriate prudent rule guildelines.