A new strategy for SMSFs
Running a Self-Managed Superannuation Fund? Looking for rewarding new ways to invest that can provide regular cash flow at attractive rates? There is an innovative new alternative that might be the answer.
‘Term Investments’ (not to be confused with ‘term deposits’) have already been attracting a lot of attention from wholesale and high net worth investors and now SMSF trustees are discovering how this ground-breaking investment option can satisfy both their compliance and investment objectives in one neat solution.
Diversify your retirement investments
Some investments within your SMSF need to be readily accessible, but traditional alternatives, such as bank term deposits, are barely covering inflation in the current low interest rate environment. This is where the Term Investment solution can be a clever new alternative and could be seen as an income stream for SMSFs.
James Mawhinney, Managing Director of Term Investment provider IPO Wealth, says his company is successfully filling this gap in the market. “We see ourselves as a real market disruptor that can offer a practical new alternative in an area where investors really want new ideas and approaches to satisfy their SMSF investment needs.”
Balancing risk and return
One way of looking at Term Investments is as a happy medium between the risks of growth assets, such as equities or real estate trusts, and the limited returns of traditional fixed interest investments, such as term deposits and bonds.
Mawhinney expanded on the shortcomings of traditional cash investment products. “Inflation is currently at 2.10% according to Reserve Bank assessments, but many cash investment products are struggling to cover that. What’s more, many high net worth investors only have a portion of their capital guaranteed.
“At IPO Wealth we are finding that the Term Investment approach is attracting SMSF investors who want regular cash flow and attractive rates, with exposure to growth markets where the margins are healthier."
IPO Wealth offers Term Investments of between 3 months and 60 months with advertised rates ranging from 3.25-6.75% per annum. Investors who place investments above $1 million also earn bonus interest of 0.5%. Adding to their attraction is the benefit of no setup fees or account-keeping fees and a high level of personal, locally based service from their Melbourne CBD headquarters.
The IPO Wealth investment approach
Achieving the balance between limiting risk and securing attractive returns comes down to the investment approach, as Mawhinney explains. "At IPO Wealth we take a conservative approach to growth industries by making well-considered, strategic investments locally and internationally. We find this provides us with comfortable safety margins that we are happy to share with our investors in the form of higher rates.
"Our private equity division targets growth industries such as fintech, mobile payments, apps, big data, smart cities, internet services, e-commerce, shared economy such as Uber-style companies, mining technology, software, and gaming.
"We often take security interests over the businesses we invest in and conduct extensive due diligence on the businesses, the people and the industries we choose to target.”
Ticking the boxes for SMSF investors
Endorsing the attraction of Term Investments was investor Jan D from St Kilda in Victoria. "I read IPO Wealth’s materials, visited their office, met with their people for a couple of hours to understand the detail of how they can offer their rates of return, and was frankly won over.
“What IPO Wealth is doing with their investment strategy in Australia and globally is impressive! I like the level of security provided by their structure and that they are working in growth markets.
"If you want a better return and need comfort that your money is in good hands, I recommend speaking with the team at IPO Wealth. This company offers customer service that is unique in its inclusiveness and creates win-win outcomes."
Are you frustrated by the low interest rate environment and its impact on your income stream? Share your thoughts below.