SMSF and Other Investment Sources

P2P/Private Lending is an exciting new opportunity to increase ROI. Do you have underperforming assets or an SMSF that would serve you better if reallocated?

Nathan Daly
May 21, 2020

SMSF and Other Investment Sources

Of the plethora of tech innovations hitting the mainstream over the last couple of decades, Fintech has probably garnered most of the attention by bringing everyday transactions services to anyone with internet connectivity.

But one of the largest buzzes hitting the ether today is that of peer-to-peer or private lending. With software solutions providing the “middleman platform,” Fintech is bringing together suppliers and consumers in the lending/borrowing market, offering a vast array of new opportunities for both borrowers and investors.

For many, this market may be an intimidating territory. But with a partner like Acumen Finance as your facilitator and guide, this field is easier to navigate than you might think.

Specialising in direct first mortgage investments using private loans for property development finance, Acumen Finance’s success stems from the company’s ability to mitigate lending risks while matching investors to borrowers presenting low LVR, solid collateral, and a demonstrated capacity to repay. If you’re thinking about adjusting your portfolio to include these solid, high-return prospects in your investment portfolio, contact us to talk with an industry expert and see if you qualify today.

Who We Are

With a pool of highly sophisticated investors boasting in-depth knowledge and investing experience in commercial mortgages, property development, and short-term, hard-cash loan products, Acumen Finance seeks to expand its portfolio of investors to service the growing demand of this market. With return rates from 6% to 12% - far exceeding interest rates for bank accounts and government savings bonds - many savvy Australian investors are wondering how to join this investment opportunity.

To help you decide if your money could be working smarter for you, we offer a look at some of these common investments to help you identify whether your current investment portfolio could use some resuscitation.

Show Me The Money

Let’s face it, not everyone can count on an inheritance; not everyone has “love money” from friends and family they can use to grab for that unique investment opportunity that urgently needs cash now.  But if you’ve been a “saver”, chances are you have resources available to you – you may just have to think a little outside of the box.

Super Charge Your Super Fund

Compulsory since 1992, the Australian Super Fund balance has over $2.51 trillion in assets under management (AUM) as of 2018. That’s almost double Australia’s GDP for the year and 40 per cent more than the market capitalisation of the ASX for the same period.

As a retirement pension scheme, you are not allowed to access your Super Funds until the preservation age. But did you know you can rollover your fund into a Self-Managed Super Fund (SMSF) to direct and invest on your own? Obviously, restrictions apply and managing the fund is not for everyone. We recommend that you visit the ASIC website and consult with a rollover professional before opening an SMSF for investing.

First off, to set up an SMSF, you would need to start a business (corporation), appoint a trustee and members, open a bank and a trust account, and obtain a trust deed. Then you’ll need to declare your asset value and prepare and distribute account statements annually. Ultimately, you will need to engage an auditor, tax preparers, and actuaries. The good news is that you can hire experts for all your SMSF administrative needs. However, keep in mind that the trustee is ultimately responsible for the SMSF’s activities.

If you are in a position to manage the administration (or delegate to the professionals), it is possible to use your Super to invest in more lucrative ventures – such as P2P lending.

Home $weet Home

As of 2018, 68% of Australian’s owned a home. Of those, 30% owned their homes outright while the balance was paying a mortgage. Homeownership is seen as a stable and conservative investment, not less noteworthy due to its practicality. The Global Property Guide Asia Pacific reports that, over the last 10 years, Australian home prices have increased by over 61% (not adjusted for inflation). So, if you’ve been paying a mortgage, this translates to an equity balance against which you can borrow.

To access home equity, you can write a second mortgage on your home. Note, however, that in light of increased regulation from the RBC following the 2017 scandals, many banks are not writing these loans and if they do, the loans will be capped at a low percentage of equity value.

Another option that allows you to access up to 100 per cent of your home’s equity is the Caveat Loan. The primary difference between a caveat loan and a second mortgage is that the caveat loan - an official note on the property title - locks the ability to take any further dealings against the property. In exchange for the caveat loan agreement, the lender receives an equitable interest in the property. And with a caveat loan, other competing loans cannot take priority stake in the event of liquidation, insuring lenders against possible losses in the event of borrower default.

Other Sources

Being conservative is a good safe strategy. Low-risk investments offer stability and security to preserve wealth. However, investing too conservatively may not provide you with the capital growth you need for the future you envision.

Generally speaking, in your younger earning years, a bit more risk is more tolerable. Time is your friend. You can hold investments through volatile markets or modify your investment strategy in the wake of economic cycles.

If you’re ready to adjust your portfolio for growth, consider reallocating some of these more conservative investments:

Government Bonds: Over the last year, only the 10-year Commonwealth Government Bond has broken the 2% interest rate ceiling. NSW Treasury Corporation bonds have performed only slightly better with a 10-month average of only 2.04% for 10-year bonds. They may be safe, but the interest rate is less than inflation, and upon maturation, your investment has not kept pace with rising costs.

Annuities and Insurance: You may have bought a life insurance policy to protect your young family. But if your family has grown and started families of their own, you should consider whether that policy premium is serving you. Likewise, if an annuity was your investment choice, you may have some cash that’s stagnating and not working as hard as it could.

Markets: Perhaps you’re more of a hands-on investor who likes to read the business section of The Sydney Morning Post over brekky. Do you have money sitting in an under-performing Managed Funds? A bit more volatile, higher-risk Shares (Stocks and Equity) may have been more your style when you were more risk-tolerant, but can you tolerate those risks as you approach retirement?

Any one of these is a good investment IF they exceed the cost of idle money (loss of principal due to inflation) ANDmeet your growth expectations while respecting your tolerance for risk.

At Acumen Finance, we are offering an investment opportunity to help you meet your growth goals. Matching investors to borrowers in the private lending market is our speciality. Backed by a staff of experts and sophisticated investors, we have successfully mitigated investor risk while serving this growing and exciting market. Contact ustoday to see if you qualify to be on the receiving end of our investment strategies.