Superannuation Discussion + market volatility

[andy2015]

For anyone who was reading my issues with investment adviser and the 'Wrap' platform product they were recommending, and the problems I had with it over its complexity etc.

I sent a mildly terse e-mail to the adviser saying exactly what my problems were and asking if they could suggest resolutions. To my surprise, they did, at least as far as they could, I think.

They suggested an arrangement where the fees might be crystallised would be less and they also said while they couldn't change the sign-up form and the complex contract that produced, they did send me an e-mail with words that addressed my points of concern. If the things that concerned me ever come to light, I'm pretty sure I can rely on the e-mail to mitigate.

So, I'm going to go forward, but only investing half the amount I originally intended. I do believe in the principle that you get what you pay for, and its worth paying a professional for advice. I'm not stuck with either the adviser firm or the product and can punt either if I need to - at some cost, but its not onerous.

I'm opening a CommSec account with an attached cash account which gets me very cheap brokerage - not the absolute cheapest out there, but I still have my other accounts with CBA and like I said above, there is a real relationship manager in the Hobart office who helps me out from time to time. Plus its not a bad share trading platform. (I've had a personal one for years).

Going to get some EFTs with the balance of the funds that were going to the Wrap platform.

Looked at SelfWealth instead of CommSec? $9.50 trades no matter the trade size instead of a %. I've moved to them from CommSec.

As for a wrap platform. Never used one but have you looked at Vanguards newish diversified ETFs (based on their older managed funds)? VDHG etc. Might fit your needs for a one stop diversified investment at low fees.

 

[JohnK]

In my view its kind of moot whether you can get 2% or 3% in the Bank when John has stated he wants 5% Income plus 2% capital appreciation each year. Its clear to me we aren't anywhere near that ballpark with Bank Interest (nor with property in todays market).

I think you have misunderstood my post. This is how arguments start.

My calculations take into account 5% interest and 2% inflation. With that I mean I'd expect the fund to deliver 5% growth and whatever I deduct from the fund in the first year (say $30,000) will increase by 2% each year to cover inflation.

That's why I asked is 5% growth and 2% inflation unrealistic? I'd like a 7%-8% return but that looks to be a myth although Australian Super is quoting much higher figures of ~11% return on a 2 year old retirement product. I hate it when Super funds create new products to make the returns look better.

 

[RooFlyer]

Looked at SelfWealth instead of CommSec? $9.50 trades no matter the trade size instead of a %. I've moved to them from CommSec.

As for a wrap platform. Never used one but have you looked at Vanguards newish diversified ETFs (based on their older managed funds)? VDHG etc. Might fit your needs for a one stop diversified investment at low fees.

CommSec with a linked CBA Super Fund cash account (which I have) costs $10/trade. I'm not expecting to do a lot of trading, so that cost isn't a big factor anyway.

Edit: more for bigger trades - 0.12% for say, $50K; $60. Above comment applies

Yes, I'll have at least a couple of Vanguard ETFs; I've grown to like them too.

 

[Buzzard]

It’s moot now. I’m withdrawing a lump sum Monday week to pay off a mortgage. Most of the rest of the super is now in shares.

It's still a good place to keep your cash. With an ATM card it can be your day to day account whilst earning a good rate of income.

 

[Pushka]

It's still a good place to keep your cash. With an ATM card it can be your day to day account whilst earning a good rate of income.

I’ll check it out. But with Super Accounts I can imagine all the paperwork to start it up.

Ok, I checked it out. For a SMSF only 2.64% for a 12 month term deposit. Cash account is .4% above normal variable which they state as 1.66%. What am I missing here?

 

[VPS]

I filled out all the paperwork to access my super last week - what a palaver (I think I had to fill out 5 forms that essentially all wanted the same info name, address, DOB, super ID and TFN)

 

[JohnK]

I think JohnK you need to rethink that Bank Interest.

Why? Can't you take out ~$600,000 as a lump sum payment and put that in a term deposit that earns 3% or 2.87% for 12 months?

I've been too busy to do much recently but will definitely take charge when I get closer to retirement. I believe in do it yourself. I've done ok up to here.

 

[love_the_life]

Why? Can't you take out ~$600,000 as a lump sum payment and put that in a term deposit that earns 3% or 2.87% for 12 months?

I've been too busy to do much recently but will definitely take charge when I get closer to retirement. I believe in do it yourself. I've done ok up to here.

And you will need to declare the interest on the bank account for taxation. We 'do it yourself' as you say but don't have anything much in bank deposits only an eSaver account that we use monthly to pay for holidays and bills, rather than taking money out of super (which is still accumulating in pension mode). We have enough slack if things go pear shaped.

 

[JohnK]

And you will need to declare the interest on the bank account for taxation. We 'do it yourself' as you say but don't have anything much in bank deposits only an eSaver account that we use monthly to pay for holidays and bills, rather than taking money out of super (which is still accumulating in pension mode). We have enough slack if things go pear shaped.

The interest on the bank account should automatically go to the ATO pre-filling report. I may even be nasty and make it a joint bank account.

I know most people are happy going with the flow but I do not trust Superannuation companies. Superannuation is grossly mismanaged in Australia.

 

[Pushka]

The interest on the bank account should automatically go to the ATO pre-filling report. I may even be nasty and make it a joint bank account.

I know most people are happy going with the flow but I do not trust Superannuation companies. Superannuation is grossly mismanaged in Australia.

I think the point is that you will lose a chunk of that interest in taxes if you take it out of super.

 

[love_the_life]

Superannuation is grossly mismanaged in Australia.

And the banks aren’t? You jest!

 

[Buzzard]

I’ll check it out. But with Super Accounts I can imagine all the paperwork to start it up.

Ok, I checked it out. For a SMSF only 2.64% for a 12 month term deposit. Cash account is .4% above normal variable which they state as 1.66%. What am I missing here?

You need to open a U Saver account into which you have the majority of your funds which will earn a high rate of interest and also open a U Saver Ultra account. Having the Ultra account is what "makes" your Saver account earn the bonus so 2.87%, I think I said 2.89 upstream which is wrong. Your ATM card will be for your Ultra account which sweeps funds from the Saver as needed.
Because of the automatic sweep function, you can withdraw, transfer etc up to the maximum of both accounts, you are not limited to what is in the Ultra account.
Sorry if I make it seem complicated, it really isn't.

 

[Pushka]

You need to open a U Saver account into which you have the majority of your funds which will earn a high rate of interest and also open a U Saver Ultra account. Having the Ultra account is what "makes" your Saver account earn the bonus so 2.87%, I think I said 2.89 upstream which is wrong. Your ATM card will be for your Ultra account which sweeps funds from the Saver as needed.
Because of the automatic sweep function, you can withdraw, transfer etc up to the maximum of both accounts, you are not limited to what is in the Ultra account.
Sorry if I make it seem complicated, it really isn't.

Ok. I don’t think that’s available for super funds though.

 

[Buzzard]

Ok. I don’t think that’s available for super funds though.

Maybe not. +1 and I have joint accounts in our names. We have to put either our minimum 4% draw down or funds for living expenses somewhere .

 

[RooFlyer]

I filled out all the paperwork to access my super last week - what a palaver (I think I had to fill out 5 forms that essentially all wanted the same info name, address, DOB, super ID and TFN)

That's interesting. I asked my accountant how to "declare retirement" and start taking $ out instead of putting in and the advice was - just go ahead and they'll fix up the paperwork later, including calcs on the 4% compulsory amount.

 

[Pushka]

That's interesting. I asked my accountant how to "declare retirement" and start taking $ out instead of putting in and the advice was - just go ahead and they'll fix up the paperwork later, including calcs on the 4% compulsory amount.

Same here but guess that’s because it’s an SMSF. I had to convince the Trustees I was going to retire permamently. MrP and I were both convinced. I think he might be a tiny bit envious.

 

[amaroo]

My calculations are based on 5% return on investment and 2% inflation.

Is that an unreasonable expectation?

IMO, not a problem. Our fund (SMSF) has averaged well into the double digits.

 

[Flying mermaid]

IMO, not a problem. Our fund (SMSF) has averaged well into the double digits.

yes but I bet you don’t have it in a bank account earning interest

 

[Pushka]

IMO, not a problem. Our fund (SMSF) has averaged well into the double digits.

yes but I bet you don’t have it in a bank account earning interest

Plus young enough to be in the risk taking phase. We had growth like that in our forties and fifties.

 

[Flying mermaid]

Plus young enough to be in the risk taking phase. We had growth like that in our forties and fifties.

Also not in the draw down phase - we take pretty big chunks out these days