I’m aware of some of the long-term risks around accessing Super early, however my question is: what if I was to use that $10k of super to put toward purchasing a property? It would still leave me with a substantial balance that would continue to grow over the years as I am only 26 years old, and would be an investment toward my property portfolio that would also support my retirement in the future. It's a tricky one and i would really appreciate some advice as this one has been difficult to explore online. Thank you in advance!
Ally in Tweed Heads
Top answer provided by:
Paul Benson
Thanks Ally. As you’ve observed, either way it is an investment that you would expect to grow.
The key difference is the tax treatment. If your $10,000 is allowed to grow in superannuation, it is taxed at a maximum of 15%. And when you retire it can provide tax free income.
If instead you invest your $10,000 outside super, say in property as per your question, then it is liable for normal personal tax on all income and capital gains.
Some other points to consider. Your property investment is likely to be geared (ie. you will borrow some money). Gearing magnifies outcomes, both positive and negative. A property is also a single asset with a single tenant and is therefore more risky than your super fund which will be highly diversified. Finally, property has a lot of costs – stamp duty, council rates, insurance etc. Be sure to do your numbers.
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