The following information is general in nature and is provided to give you some insight to the benefits of using superannuation as a savings and investment option.

There are a number of tax concessions that apply to superannuation both while you are saving (accumulating) and when you receive an income from your investment at retirement. For example during the accumulation phase of superannuation before you retire, income earned on your superannuation savings is generally taxed at a maximum rate of 15% and any capital gains earned are taxed at a maximum of 10%.

When you have retired and are receiving in income from your superannuation you do not pay any tax at all on either income or capital gains earned by your superannuation investment. In addition, you may be entitled to a tax rebate on the income paid to you from your superannuation.

There are also benefits to making contributions to superannuation throughout your working life which can be of advantage to you. For example you may be able to:

salary sacrifice into superannuation – this gives you a pre personal tax contribution to superannuation and lowers your taxable income make spouse contributions – this allows you to claim a tax rebate if your spouse is a low income earner and you make a contribution to their superannuation savings if eligible make co-contributions – the government will match each $1 of your contribution with $1.50 up to a maximum personal contribution of $1,000; and make undeducted contributions – this provides nontaxable income in retirement.

These are some of the strategies available to people to build their retirement nest eggs. As you can see, superannuation is a complex area and you should therefore seek professional advice about the best strategies for you both in the superannuation accumulation phase and also when you retire and want to take an income from your investment.

To explore the opportunities which may be available to you contact a Salisbury Adviser for a consultation.

Superannuation is essentially a long-term savings scheme with the objective of providing an income for your retirement.

Superannuation generally involves employers, the self-employed and employees making contributions on a regular basis over a long period to a superannuation fund. The superannuation fund holds the contributions in trust for the member - you. Your contributions are invested to increase the amount of money available to you when you retire.

You can only withdraw money from your superannuation when you meet "a condition of release". There are a number of these but the most common condition is when you retire. At that time you can either withdraw all or part of you superannuation (there may be tax to pay on withdrawals which depends on the classification of the money being taken out) or move from accumulating superannuation to having the superannuation savings pay your an income.

Superannuation is probably your biggest asset outside of your home. It is therefore important that you understand what it is and how it works so that you can maximize your benefits for retirement.

Consulting a Salisbury Group Adviser about your superannuation and what you can do to build your nest egg is a great investment for your future.

Different people have different feelings about how they would react if their investment lost value – this is their attitude to risk. To determine your risk profile a financial adviser will ask you a number of questions and assess your answers. Risk profiles are described in a number of ways but are commonly called cautious, conservative, balanced, growth and high growth.

Your risk profile allows an adviser to recommend investments for your which align with your attitude to a financial loss. You have probably heard of the expression: "the higher the risk the higher the return". The risk - return tradeoff is part of every investment and this is one of the major considerations made by an adviser when recommending investments for each client based on their individual risk profile.

Your Salisbury Adviser will be able to assess your risk profile and give you more information on what this means for you in terms of investments.

Gearing is borrowing money to invest. There are a number of ways people can access borrowed money to use for investment. The most common ways that people borrow money to invest are by using the equity in their homes or using a margin loan.

The borrowed funds can be used to invest in shares, managed funds, property or other investments. As a general rule the interest on the amount of money borrowed to invest is tax deductible. You should seek advice from your tax adviser about the deductions associated with any investment before you go ahead with it.

Gearing is a wealth accumulation strategy because it allows you to:

• invest where you would not otherwise be able to because you did not have the cash; or
•  increase the amount of your investment.

You probably have friends or know people who have investment properties – these are most likely held using a gearing strategy.

More and more people are thinking about their financial futures and how to build their financial nest eggs. Gearing can be one answer to help you achieve your financial goals.

However, you should be mindful of the risks associated with gearing. These include an increase in the interest rate that you are paying on the money your have borrowed and the failure of the investment that you have made to give the outcomes you expected.

It is important that you seek professional advice about gearing into investments before you act. Your Salisbury Adviser will be able to:

• answer your questions about gearing;
• will also be able to show you the potential benefits and pitfalls of using this strategy; and
• can advise you on the various types of investments that are suitable for gearing strategies.
  
  

Managed funds are also called unit trusts. They are established by pooling the funds of a large number of investors and having the funds invested and managed by a professional manager.

Managed funds are available for Australian shares, international shares, property, fixed interest, hedge funds and range of other types of investment. The investment mix and management style of each trust is dependent on the investment strategy of the trust. For example one trust may actively invest in Australian shares in the top 100 listed companies on the Australian Stock Exchange (ASX) whereas another may invest in property trusts and syndicates and yet another may have a diversified investment mix in property, Australian and international shares, cash and fixed interest.

Each managed fund has to provide a Product Disclosure Statement (PDS) which is lodged with the Australian Securities and Investments Commission (ASIC). This document outlines to investors what the assets the trust will invest in and what management strategy it will use. The PDS also outlines the fees and charges an investor can expect to pay for having their investment managed for them.

Investors in a managed fund trust hold "units" in the trust which entitles them to a proportion of the trust's income and / or capital growth. Managed funds offer investors an opportunity to invest in a range of asset classes with relatively low amounts of money compared with investing directly into a comparable investment.

Choice of superannuation fund legislation was passed in July 2004. It means from July 1 this year a number of Australians will be able to choose the super fund into which their Super Guarantee Contributions (SGC) or compulsory superannuation money is paid.

You should have choice of superannuation unless you are:

You should check with your employer if you can choose your superannuation fund.

How is this different from the past?
Before choice of superannuation fund legislation, employers chose the super fund for their employees. The only choice if any, employees had, was the type of investment within the superannuation fund ie investment choices such as conservative, balanced or growth.

What exactly do I get to choose?
If you qualify for choice, you can choose from a range of superannuation funds including industry funds, corporate master trusts, retail funds and a do-it yourself (DIY) super fund; or you can choose to stay with the superannuation fund recommended by your employer.

What do I need to do?
All employees eligible for super choice should be issued with a standard choice form prior to 29 July 2005 by their employer. This form advises employees of their ability to choose their own ‘eligible choice fund’ and contains the name of a default fund should they not take up the right to choose their own fund.

Eligible employees can consult a Salisbury Group Advisers or conduct their own research into which superannuation fund best suits their needs and choose an alternative complying fund. Once the fund is chosen, written notice will need to be provided to the employer.

If you are able to choose but do nothing your superannuation will stay with the employer’s default fund.

Where can I get more information? Contact a Salisbury Adviser who can help you make your decision about "choice" or visit the Australian Government information site at www.superchoice.gov.au