Instalments in SMSFs - Portfolio Study
In general Self Managed Super Funds (SMSFs) may not borrow to invest, therefore there are limited possibilities for SMSFs to gain geared or leveraged exposure to the market. Instalment warrants are one of the only eligible forms of gearing within a SMSF and provide SMSF holders a way to maximise there exposure without the risk of a margin call.
Using Instalments in a SMSF is one of the ways that geared exposure to the market can be obtained. Currently instalments are one of the few eligible forms of gearing within a SMSF. Instalments provide all the benefits of physically owning the underlying share, with the added possibilities of enhanced income and franking credits. The franking credits can be used to offset tax on other income earned by the fund, and/or tax payable made by contributions to the fund - thus creating an earnings shelter.
Instalments in Self Managed Super portfolio study
Instalments provide SMSFs a means of maximising their exposure given the contribution cap within super as well as creating an enhanced earnings shelter to off-set other income earned by the fund.
|Portfolio study information|
|Level||Beginner - Intermediate|
|Return for entire period||56.18% (shares)
|Return for 2009||56.18% (shares)
|Holdings||BHP, CBA, WOW, QBE, STW (shares)
BHPSSR, CBASZX, WOWSSR, QBESZX, STWSZX (instalments)
* Return is total Return including income.