Question: I follow your articles with interest and like your ideas. I understand that we are heading for a bit of volatility and perhaps, with this in mind, we should be looking outside the square. My question to you all is: how to target the markets that our “cousins” in the US can get access to? I think India will eventually get going and was wondering if you think the India Fund currently being offered would be a good investment?
Answer (By Paul Rickard): I think if you want to target the markets “that our cousins in the US get access to”, then it may be easiest to open an international share trading account (try Nabtrade or CommSec) and buy units/shares in these funds directly that are listed on the major US exchanges. Back on the Chinese market, there are funds locally like the AMP Capital China Growth Fund (ASX Code AGF), however it is only investing in China A shares.
With regard to the India Fund, I won’t be investing (at least not in the IPO), and not now since the huge run up in their market. My impression of India is huge potential, missed opportunities. Maybe this time it will be different.
Question 2: My wife and I are 52 years old and established our SMSF about four years ago. We had about $300,000 and we decided to purchase a unit for about $700,000. We have about $30,000 worth of shares in the fund. I am concerned I may have to sell our property upon retirement to satisfy government regulations that I have to draw down 4% of my SMSF if I’m under 65, 5% if I’m between 65-74 and so on. Can you shed some light on this issue if your SMSF is mainly comprised of real estate?
Answer 2 (By Paul Rickard): This is the law – so yes, if you start a pension and only have one asset – then you will need to sell it so that you can take the minimum pension.
You don’t have to start a pension – ever! If you don’t, your fund will continue to pay tax at 15% on earnings – rather than 0% if it is in pension phase.
So, bottom line, if you are planning to start a pension (potentially, you will be eligible at circa 58 – assuming you were born between 1 July 62 and 30 June 63) – then you should be planning to get some other assets into your fund.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
