What is the best long-term investment for medium to large sums of money? There is no simple answer to that question because it depends on each person’s individual circumstances. However, superannuation has to be one of the best options for many people, because it is very lowly taxed.

During the accumulation years before age sixty, income is taxed at only fifteen per cent and capital gains at ten per cent. Once in a retirement pension, earnings are completely tax free.

Each person reaching retirement age now can set up a new pension account with up to $1.9 million in it. That’s $1.9 million earning totally tax-free returns. Large sums of money invested tax free have a certain appeal.

However, there are limits on the amounts people can contribute to superannuation. It isn’t possible to make a single contribution of $1.9 million.

Some of the limits are tied to financial years. So anyone who has a substantial sum of money available should consider whether it would be smart to invest in super in this financial year, before June 30.

There are several types of contribution including non-concessional, capital gains tax concession, small business sale, and downsizer contributions. All but downsizer contributions are limited to age 75.  

Anyone under 75 can give their super a big boost by making non-concessional contributions. They can put in up to $110,000 per financial year, even if they are retired and have no work income.

They can also bring forward two future years of contributions and put in a total of $330,000 immediately, provided they make no more contributions for three years. These contributions are not tax-deductible and no entry tax is applied to them.

People who have sold a business, or assets involved in the operation of a business, and made a capital gain on the sale, can contribute the gain amount up to $500,000 into super. That will avoid the payment of capital gains tax as well as boosting their super balance.

If business owners have owned their business for more than fifteen years and sell it to retire, they can contribute up to $1,705,000 from the proceeds into superannuation.

Anyone over age 55 can make downsizer contributions. If they sell a current or former home they have owned for at least ten years they can put up to $300,000 into super. They must do it within 90 days of receiving the sale proceeds.

Many super funds offer members a wide variety of investment choices. If a person believes a particular investment type will do best they can choose it. They can even set up a self-managed super fund and operate it themselves for more control.