ATO reveals truth about SMSFs ...

[TomVexille]

Re: The totally off-topic thread

He doesn't drink, so I know to take his post with a grain of salt.

Ooops, forgot that

 

[OATEK]

Re: The totally off-topic thread

I can manage investment properties very well and would have no issues managing a SMSF. I just don't want to do the work.

I guess that fits me as well. A friend has great fun with his SMSF, even has a 7" gauge steam locomotive as an asset, but I have decided to spend my spare time on other pursuits.

 

[medhead]

Re: The totally off-topic thread

I guess that fits me as well. A friend has great fun with his SMSF, even has a 7" gauge steam locomotive as an asset, but I have decided to spend my spare time on other pursuits.

Indeed, I spent Sunday afternoon at the park with my children.

 

[penegal]

Re: The totally off-topic thread

So THAT's what you do for a job :mrgreen:

LOL, which bit?

He doesn't drink, so I know to take his post with a grain of salt.

Indeed

 

[TomVexille]

Re: The totally off-topic thread

LOL, which bit?

Drinking the fund managers tab of course

I assume that buys lots of grape juice

 

[RAM]

Re: The totally off-topic thread

Are you saying the ads are ridiculous, or that it is ridiculous that they have ads?

If the former, well each to their own. If the latter, most businesses are entitled to advertise, so I would disagree.

Problem is the Industry funds fall through the cracks and can act as businesses but do not have any of the oversight.

Try finding out who gets paid what in an Industry fund, or what 'donations' they make for example.

As a version of a cooperative but under total control of the ACTU even in the 90s they boasted (privately) of their grand plans and the uneven playing field that Keating had set up for them.

In 1994 the boast was, 'by assets we have 80% of Industry funds under our control, by members we have 96% and by cash-flow we have 98%, we are the new four pillars - the banks just don't realise it yet.'

The governance or lack thereof is run by much the same crew as the top 7 unions. Jobs for the boys are always interesting as our requests for 'benefits'.

The industry fund members, forced by industry awards setting industry fund X as the default, never have a say in whether the fund should be advertising etc. Always an interesting group. Always had CCs on the fund.

 

[cove]

Re: The totally off-topic thread

Just finalized our SMSF info for accounting and audit. I have had the time to run it since I moved to 2 days a week at the office. It would have been harder if my work hours were far higher.

 

[docjames]

I'd love to know what sort of (compound annual) returns people are able to achieve with their SMSF and what they think the key is when you "take control"?

What are people investing in their SMSF to achieve such returns (investment split)?

Not wanting to debate retail v industry v SMSF, just a genuine question about compound returns (feel fee to pick any timeframe - 1,3,5,10 years, any) and what "real life" returns people are able to achieve with SMSF.

 

[cove]

Over 3 years our fund is up 137% but they were very good markets. At the minute I am selling off the successes to get to more cash than stocks. I will have to pay some 15% tax so the gain will drop back a bit.

 

[RooFlyer]

I'd contest the notion that a SMSF is a lot of work. Depends what asset classes you put in there and the returns you are seeking. I'm in my 50s so no longer seeking high returns, just steady growth, so the main assets reflect that: property and bank shares that can just sit there, earn and chug along. For a proportion of specce opportunities there are mining shares - the sector where I've worked for 30 years and I don't need any particular extra work to follow the companies and their prospects. (I'd be reading their Quarterlies anyway )

Also, having a SMSF allows one to invest (with the advantages of doing it in Super) in some niche opportunities, especially with a few friends and colleagues (call it a co-op) , that can be quite attractive. I do need to pull my finger out from time to time to pull my weight, but overall its a bit of a yawn.

Fair dinkum, the fees and mostly hidden charges put on by retail funds are disgraceful IMHO (lesson rammed home to me when I worked in a large investment bank with a very large super arm - good grief, seeing it from the inside :shock: ). And have a look at the CVs of some of the people on the Boards of some of the Industry funds. I wouldn't trust them with my lunch money. #

# Edit - because I don't think they have the qualifications or experience to be in that position in a financial institution; not because I suspect them of malfeasance.

 

[Pushka]

We purchased a block of land in our super fund then sold it three years later for 110% profit. Our accountant wasn't excited when we purchased it but it all worked out in the end.

 

[amaroo]

Commercial returning around 20% yield pa + capital growth .... the tenants are AAA grade and extremely nice people - one even likes flying However, the share trades have been the real winner.

Lining up, ordering, drinking and chatting over tea/coffee takes longer than what I allocate on a daily basis attending to our SMSF.

 

[drron]

It is no chore for me.I have been investing in shares since 1969.So a no brainer for me to have a SMSF.
I withdrew from my business fund in 2003.Results-$x in 2003.Since then I have contributed $1.67x,have withdrawn $1.5x.Capital now stands at $3.5x despite a 50% loss in the GFC.
Just out of interest I left some money in an industry fund from a job I had in SA.That was in 2008.I have made the princely sum of $1.50 after fees.A return of less than 0.01%.

 

[badseed]

SMSFs are very useful for the right kind of person. They are also well open to abuse - there have been quite a few individuals who've used their SMSF to invest in their own businesses / assets / debt, breaching the 5% 'in-house' asset rules.

It shouldn't come as a surprise that the ATO likes them either, because they get to regulate and supervise SMSFs! Whereas all of the other super funds are supervised by APRA.

 

[RAM]

There's much spin/propaganda/hype about any and all types of investment vehicles.

Split between super/non-super can be just as important, and too often this is not recognised by many. The way the industry works is not really that far of a roulette wheel in Crown (unfortunately).

Most 'professionals' get caught up in the mania/bubbles and fall by the wayside (or get kept as they are not a 'risk' to the powers-that-be). Going into every bubble since the early 80s (not just equity market bubbles but property, interest rate and FX) saw the wholesale consultants (without exception especially in 1986/87 but also 1999/2000) catch the bug.

All too often you'd see competitors (& some colleagues) cut their profits and let their losses run - human nature is expensive - admitting that you made a big mistake is financially rewarding but ego reducing. You don't see it happen often in funds mgmt or financial consulting.

There is so much noise and greed.envy to get in the way of common sense that there are thousands who have lost virtually everything through going it alone either via SMSF or non-super. Equally there are many who have done well BUT there are multiples of both those numbers that either have faulty memories or cannot admit the truth.

It comes down to how greedy you feel (black & white language used here!) - do you let it ride for the 9th 'red' in a row or do you take profits? One of the best 'rationality' tools is to have the post-WW2 annual total returns for the Australian Stock Market (accumulation series) for the 12 months ended 30.6.xy and 31.12.xy. Also (from the ABS web site) get the CPI for the same periods. Much of the return info you can get easily (such as from the RBA site etc).

Have a look at how many years in a row (runs) you get returns in the teens.
Have a look at how many years in a row you get returns that are negative, below the annual inflation rate.

Then remember some simple maths:

A loss of 50% requires a gain of 100% to get back to where you started (not taking into account any tax paid along the way or the impact of CPI over that time).
A loss of 33.3% requires a gain of 50% etc.

Too many fund managers, consultants and trustees don't remember or know these simple points.

Post 1987 I worked out the numbers for several companies who'd taken their super away from where I managed money exactly how much that decision had cost their company's super fund for the period from 30.9.87 to 31.12.88. For 4 companies it was more than two years earnings before interest and tax. Those companies each used one of the top three wholesale investment consulting groups by-the-way. One company lost (real money here not just the opportunity cost of not getting our positive returns through 1988 just what we didn't lose in Dec Qtr 87) 58% of the fund. Two of the managers they took the money from us to give to were closed by early 1989. Each was on the top 5 list for every wholesale consultant.

Point being -everyone's a expert before the mistake/fall.
For example in 1993/4 you could buy a brand new Collins St office tower for 40% of construction cost (no land value at all) yet no super fund was interested. They started buying them in 1995 at 110% of construction cost.

 

[JohnK]

You lot completely miss the point. The objective of Super Funds is to maximise benefits for EMPLOYEES of the super fund... Oh wait, I've been spending too much time in bars on Collins St drinking your fund manager's tab?

I know you were joking but that statement is not far from the truth.

Super funds used to quote 10, 15, 20, 25 year or more growth figures.

Now we are back to 5 year growth figures? Why? GFC? Are the bigwigs still earning their megabucks, company cars, business/first class trips with my hard earned but very easy to spend money?

If the tax department didn't make self managed funds so difficult I wouldn't invest a dime in super funds. I would have my own and do a much better job.

 

[RB]

If the tax department didn't make self managed funds so difficult I wouldn't invest a dime in super funds. I would have my own and do a much better job.

Isn't there some conflict in these 2 sentences?

 

[scallops]

Best thing l ever did three years ago was to set up my own SMSF. The key is to get a qualified professional company to help advise and run your SMSF and you don't need more than $500,000 to start one up. SMSF require a lot of attention but so they should it's your money and not some high priced super expert. If you are happy with industry funds or retail funds to manage your affairs good luck to you, because from my experience you're going to need just that, a lot of luck. If only Governments
would stop fiddling with the rules.

 

[JohnK]

Isn't there some conflict in these 2 sentences?

Is there? Apologies.

I would have my money in property or cash. Not someone's back pocket.