Superannuation Discussion + market volatility

[MEL_Traveller]

Thanks.Ill look into the EFT thing! No idea about franked credits and the like! Is 5% cash in bank as good as an EFT?

 

[SYD]

Thanks.Ill look into the EFT thing! No idea about franked credits and the like! Is 5% cash in bank as good as an EFT?

No necessarily. A good fund / ETF will hopefully return better in the long run.

But putting everything into one investment is analogous to betting on one number on the roulette wheel.

A good investment strategy is to diversify across different asset types eg stocks, bonds, cash, property etc The ratio of each will vary depending on your appetite for risk and investment horizon (short, medium, long term).

Seeking out professional advice ie a reputable financial advisor is highly recommended.

 

[MARTINE]

No necessarily. A good fund / ETF will hopefully return better in the long run.

But putting everything into one investment is analogous to betting on one number on the roulette wheel.

A good investment strategy is to diversify across different asset types eg stocks, bonds, cash, property …. And under the mattress

ETF can be easily bought on ASX
I have a few in my portfolio to get access to the big US stocks(alphabet, meta etc) and European (novonordisk the makers of ozempic) without the need to set up overseas trading accounts. Means all my assets domiciled (and taxed) here. Dealing with one tax office is enough

 

[pangwen]

I’m with an industry super fund. Low fees and really good returns!

Is there any way to invest in the same way as my super fund, but without it being superannuation?

Obviously my super fund is doing something right with the mix of shares and other investments.

An ETF (exchange traded fund) definitely meets your criteria.

While an ETF would get you very close, it depends on how much you like your super fund's "other investments". You would also need to buy a variety of ETFs to match your super fund's balanced option - there are mixed ETFs like VDHG and DHHF but they mostly include Australian Shares, International Shares and Fixed Interest. They wouldn't have a specific allocation to infrastructure and property.

For example, taking the Balanced option from AustralianSuper, their investments include:
- Australian Shares - can do this with ETFs like A200, VAS, MVW among others
- International Shares - can do this with ETFs like VGS, IOO among others
- Private equity - I don't believe you can get this with ETFs
- Unlisted infrastructure - by definition, you can't get this with ETFs, but you can get listed infrastructure (see below)
- Listed infrastructure - you can do this with ETFs like VBLD
- Unlisted property - by definition, you can't get this with ETFs, but you can get listed property (see below)
- Listed property - you can do this with ETFs like VAP, REIT among others
- Credit - I understand this includes private loans to companies. You can't get this using ETFs, but I understand in principle it's similar to fixed interest
- Fixed interest - you can do this with ETFs like VGB, CRED
- Cash - you might be able to do this with ETFs, but why bother

 

[cove]

Yes @MARTINE that is how I feel. Had the ATO spend half a year on my personal and business affairs and they never asked Mrscove anything. That is the last time I will put my name as the family trust name. I was naive in 1978.With the ASX at an all time high our superfunds should be looking good.

 

[lovestotravel]

*Note: peeps who call for the removal franking credits on income tax have no idea what they’re talking about.

The same ones that want rents frozen etc....

 

[Brissy1]

Oh dear, something terrible happened to me.
Every year, I make the max concessional contribution for both my wife and I (self employed).
I was with Super provider A.
I switched to Super provider B.
I did not submit the concessional contribution form while with provider A.
Provider A cannot accept the form as funds are no longer with them.
Provider B cannot accept the form as contribution was before the switch.

Accountant advised that there is nothing we can do.
Cannot claim tax deduction.
There is no recourse.

Sorry to hear that but thanks for sharing, something to remember. It does seem unfair as contribution rules apply to individuals not separate accounts.

I suppose that you can't reopen an account with A, transfer some $ from B to A so that A can then take out the 15% ?
(Edit- I gather that one can have an account with $0 balance just as when one initially opens an account, so technically fund A could have kept that account)

 

[MARTINE]

Thanks.Ill look into the EFT thing! No idea about franked credits and the like! Is 5% cash in bank as good as an EFT?

Also depends how old you are and risk tolerance.
Ive got super in various accounts and my own share portfolio. One super account I am happy to flog at the most aggressive investment mix. This was some bits and pieces earned from consultancies that I am happy play with it as small fry.

 

[muppet]

*Note: peeps who call for the removal franking credits on income tax have no idea what they’re talking about.

OT but most educated “peeps who call for the removal of franking credits” are making no such call, they are calling for an end to them being refundable. i.e. both the company and the individual end up paying $0 tax, owing to the structure of the shareholder’s tax affairs.

 

[muppet]

While an ETF would get you very close, it depends on how much you like your super fund's "other investments". You would also need to buy a variety of ETFs to match your super fund's balanced option - there are mixed ETFs like VDHG and DHHF but they mostly include Australian Shares, International Shares and Fixed Interest. They wouldn't have a specific allocation to infrastructure and property.

For example, taking the Balanced option from AustralianSuper, their investments include:
- Australian Shares - can do this with ETFs like A200, VAS, MVW among others
- International Shares - can do this with ETFs like VGS, IOO among others
- Private equity - I don't believe you can get this with ETFs
- Unlisted infrastructure - by definition, you can't get this with ETFs, but you can get listed infrastructure (see below)
- Listed infrastructure - you can do this with ETFs like VBLD
- Unlisted property - by definition, you can't get this with ETFs, but you can get listed property (see below)
- Listed property - you can do this with ETFs like VAP, REIT among others
- Credit - I understand this includes private loans to companies. You can't get this using ETFs, but I understand in principle it's similar to fixed interest
- Fixed interest - you can do this with ETFs like VGB, CRED
- Cash - you might be able to do this with ETFs, but why bother

Agreed, i think unlisted assets is key. Often they are monopolies and generate very attractive and stable returns - how the funds value those assets is a bit … opaque in my view.

 

[SYD]

OT but most educated “peeps who call for the removal of franking credits” are making no such call, they are calling for an end to them being refundable. i.e. both the company and the individual end up paying $0 tax, owing to the structure of the shareholder’s tax affairs.

That’s actually not correct. The companies have paid taxes (otherwise there would be no Franking Credits to pass on).

It’s an issue for individual tax returns.

 

[Pushka]

OT but most educated “peeps who call for the removal of franking credits” are making no such call, they are calling for an end to them being refundable. i.e. both the company and the individual end up paying $0 tax, owing to the structure of the shareholder’s tax affairs.

If the company doesn't pay any tax on profit then there are no franked divdends available for distribution.

 

[cove]

This year we are getting quite a nice refund from franking credits In our SMSF.
E super have raised our annual fee to $1199 which covers accounting and audit for both of us so that is very reasonable.

 

[MEL_Traveller]

Thanks everyone! Complicated for someone like me who isn’t up to speed on these things.

My ‘hope’ was that I could simply buy into a fund/scheme/whatever that mirrors an industry super fund, but of course in ‘real-time time’ that I could withdraw money now (and pay relevant tax).

My super fund is doing really well, I thought there might be an offering that could match that!

 

[pangwen]

Thanks everyone! Complicated for someone like me who isn’t up to speed on these things.

My ‘hope’ was that I could simply buy into a fund/scheme/whatever that mirrors an industry super fund, but of course in ‘real-time time’ that I could withdraw money now (and pay relevant tax).

My super fund is doing really well, I thought there might be an offering that could match that!

If you’re interested in something like that, look into managed funds which can offer the “all in one” option.

It’s less real time than ETFs, but more than super - the main thing is that the deposit and withdrawal process can take days/weeks. This is slower than the couple of days for ETF trades to settle, but offers you the opportunity to withdraw before your superannuation preservation age.

Not recommending this particular product (as I am not a financial advisor - get your own advice etc etc), but many years ago I invested in the DDH Graham managed funds which were previously Qinvest, managed by QIC (the investment arm of the qld government and the historical managers of funds for QSuper prior to 2009). I had a similar mind set to you at the time - I wanted somewhere outside of super I could park my money that would behave in a similar manner to the all in one “balanced” or “aggressive” fund inside super. I’m sure there are other providers who do the same. However, as these funds are active in nature, you will need to do research into the provider as there is a risk that mismanagement could lead to very poor outcomes.

I no longer have any money in those funds as I sold my units to fund a house deposit - this was well before the FHSSS came into existence.

 

[SYD]

If you’re interested in something like that, look into managed funds which can offer the “all in one” option.

It’s less real time than ETFs, but more than super - the main thing is that the deposit and withdrawal process can take days/weeks. This is slower than the couple of days for ETF trades to settle, but offers you the opportunity to withdraw before your superannuation preservation age.

Not recommending this particular product (as I am not a financial advisor - get your own advice etc etc), but many years ago I invested in the DDH Graham managed funds which were previously Qinvest, managed by QIC (the investment arm of the qld government and the historical managers of funds for QSuper prior to 2009). I had a similar mind set to you at the time - I wanted somewhere outside of super I could park my money that would behave in a similar manner to the all in one “balanced” or “aggressive” fund inside super. I’m sure there are other providers who do the same. However, as these funds are active in nature, you will need to do research into the provider as there is a risk that mismanagement could lead to very poor outcomes.

I no longer have any money in those funds as I sold my units to fund a house deposit - this was well before the FHSSS came into existence.

There’s a plethora of managed funds - some exceptional and some that are or become become duds - I have and had some from each over the years. But they also have can have high minimum entry purchases, relatively high management fees and usually only distribute once or twice a year (as do most direct shares).

I personally wouldn’t recommend investing in just one.

ETFs have been embraced by the younger generations. They have lower fees and are easily accessible for purchase using online brokers with low or zero brokerage fees. A popular option is something that tracks the ASX. Basically you’re buying a prorata spread of Oz listed companies via the fund ie you don’t directly hold shares in x,y or z stock but shares in the fund. A potentially good entry level investment but still has the underlying risk of the market going down as well as it could go up.

 

[Brissy1]

$1199 which covers accounting and audit for both of us

"both of us"...good point.

Funds, particularly Industry funds, have a history of campaigning against SMSFs (and unfortunately their lobbying has been successful with the current Gov), by eg. "advising" how much it costs to run a smsf (which may have multiple members) compared to having an industry account (single member). (And comparison includes high cost SMSFs with borrowing costs)

Disclosure: I also use esuperfund.

 

[cove]

Yes Esuper has worked well for us. Never had any accounting nor audit issues.
Some folks might battle with it.

 

[tgh]

We pay a LOT more than cove, I was happy enough with the cost until cove popped my bubble…
Otoh it is a lot of stuffing around to change so will live with my burst bubble...

 

[Pushka]

We have now both converted part of our super into an Income Earning stream. We had to find the sweet spot where the compulsory drawdown could be made up for through Salary Sacrifice and still receive the same income as if we weren't drawing down. That all started maybe 6 weeks ago. And in that time between our two accounts, the Income stream part has gained $30,000. $8000 of that was a 'reward' from HESTA. Yeah. Well actually it was deferred taxes they no longer had to pay and delivered to the Income stream account. So the balance is thousands higher than where we started. Just 6 weeks ago. And of course there is still a large chunk in the Contributions phase which we didn't convert as we don't want to chew up too much just yet. And we are still working and receiving SG and SS payments. It's sure a juggling act. I'm going to enjoy not having to pay so much personal tax and medicare this year.