Superannuation Discussion + market volatility

[tgh]

I guess you need to believe in the "system" JohnK
Shares are equity.. they are a tangible piece of our country that you can own.
Believe in our country and you must believe in the integrity of equities.
Shares adjust for inflation but cash is being eaten away.
Inflation may stay low, but even a short period of strong inflation will make cash holdings look very sick.

 

[JohnK]

Try not look at it as savings gone but rather the growth gone. Might ease the pain.

Growth? Losing money is always painful. I'm an expert and it still hurts every time.

 

[Flying mermaid]

Understand that it's all about finding the right balance. Not sitting there worrying about it all night, and there are fallback options, but if there's another 25%-30% decline as there was 10 years ago, that's a lot of savings gone that are not going to come back easily.

I guess the point is it will,come back, as long as what you are drawing down doesn’t eat into the capital amount. It’s only a notional loss. What fund are you in? 2014 seems a long recovery time - I don’t follow the funds that much but I would have thought the industry funds recovered quicker than that.

It can be trickier for me, as I might invest in a company that goes bust and then it would be harder to make that back, but if you are in a fund they tend to be better at safe options.

 

[andye]

Playing with my industry fund (First state) calculator, the balanced growth option was back to 2007 levels by Oct 2010. The growth and high growth took until late 2012 and early 2013 respectively.

 

[Flying mermaid]

Playing with my industry fund (First state) calculator, the balanced growth option was back to 2007 levels by Oct 2010. The growth and high growth took until late 2012 and early 2013 respectively.

so if @JohnK went for balanced or whatever the safest options were that could allay his fears of spending 10 years recovering?

 

[JohnK]

Playing with my industry fund (First state) calculator, the balanced growth option was back to 2007 levels by Oct 2010. The growth and high growth took until late 2012 and early 2013 respectively.

I was in MLC nest egg which I believe is/was balanced growth. I had $48,000 in that account which dropped to $36,000 in 2009 and then did not get back to $48,000 until 2014.

 

[Pushka]

I was in MLC nest egg which I believe is/was balanced growth. I had $48,000 in that account which dropped to $36,000 in 2009 and then did not get back to $48,000 until 2014.

Those were pretty awful years though.

 

[JohnK]

Those were pretty awful years though.

And there are no positive signs that those years won't be repeated.

 

[andye]

On the other hand they have been good years since

 

[JessicaTam]

[mod hat]
Back to the superannuation discussion please folks.
[/mod hat]

 

[cove]

With the business slow down in China we will be affected. It would be good if the US and China agree on fixing the trade imbalance and tariffs spat.

 

[QF WP]

Thanks. Accountant reminded me last week that if you're over the $25000 limit there's a lot of paperwork involved.

This change should get me to around $24000 next financial year. Will be a few thousand short this year. Not sure if I make lump sum payment or not this year to make up difference.

As well as the nasty tax for exceeding the cap

 

[QF WP]

Got an email today from global investment manager Legg Mason - thought I'd post here FWIW (haven't been through all of the findings yet):

Legg Mason Global Investment Survey 2018

For the last six years, Legg Mason has been taking the pulse of investors by conducting the Legg Mason Global Investment Survey.

This year we surveyed around 17,000 investors across 17 markets globally. We gained insights into their asset allocation behaviour, their views on ESG, their approach to technology, how they financially prepare for retirement and how they feel about the current market environment.

One of the key themes of the 2018 Survey was strong evidence supporting the benefits of having a financial adviser.

Investors using a financial adviser are more diversified compared to Do-It-Yourself investors, have lower cash holdings and enjoy,on average, about 1.50% higher returns from their income-producing assets. The survey also suggests advised investing delivers better results against key goals and often enables investors to hedge more effectively against downside risks.

Investor Insights: Global Investment Survey 2018

 

[amaroo]

I think the wombat is safe. Perhaps those attempting an insincere grovel face.

The Fiji and Thermomix addicted look like walking the plank.

 

[serfty]

I saw this today:

---

This week REST Super launched a suite of index funds that have 0% fees:

Australian Shares Index Fund – which tracks the 300 biggest companies in Australia (think the banks, Woolies, CSL, Sydney Airport).
Overseas Shares Index Fund – which tracks 1,576 of the biggest companies in the world (think Amazon, Alphabet (Google), Berkshire Hathaway, and Toyota ... though no tobacco stocks, which this fund has chosen to strip out). Dividends are reinvested in Aussie dollars.
Balanced Index Fund, which consists of 30% Australian shares, 45% overseas shares, 20% bonds and 5% cash.
(Technical point: REST is using Macquarie Bank’s True Index funds, which use derivatives to manage their portfolio. REST say they have done their due diligence, and are comfortable with the risk).

Let’s be fair dinkum though … nothing is free (except my wife’s apricot chicken casserole … and that has its own risk profile).

So how can this fund be?

The answer is, it’s not. The investment fee is zero, however REST also charges an admin fee, which is $67.60 per year plus 0.10% of your super balance per year. Still it’s very cheap.

Of course, before you switch to this (or any other) fund, I’d suggest you speak to a professional and get personal advice. Just make sure you’re speaking to a misfit who is crazy enough to put your interests first, and advocates low-cost investing.

---

So costs on a $400k super would be $467.60 per year.

Do any have thoughts on this product.

 

[JohnM]

Love the 'misfit' line...

 

[33kft]

Do any have thoughts on this product.

In almost any case I've seen of a comparison between the returns on an index fund without active management versus a managed fund, the index fund tends to show better returns over the long term. Yet we tend to be drawn towards the managed funds on the basis that active management by skilled fund managers should result in higher returns. A good example of this are a number of the Vanguard funds with very low fees and consistent, solid returns.

 

[cove]

Just remember that most stock markets around the world have pulled back 10% to 15% in recent times. It gets a bit hard in these markets to only pick winners. I have started to see better opportunities now that some companies have been revalued.

 

[exceladdict]

I saw this today:

---

This week REST Super launched a suite of index funds that have 0% fees:

Australian Shares Index Fund – which tracks the 300 biggest companies in Australia (think the banks, Woolies, CSL, Sydney Airport).
Overseas Shares Index Fund – which tracks 1,576 of the biggest companies in the world (think Amazon, Alphabet (Google), Berkshire Hathaway, and Toyota ... though no tobacco stocks, which this fund has chosen to strip out). Dividends are reinvested in Aussie dollars.
Balanced Index Fund, which consists of 30% Australian shares, 45% overseas shares, 20% bonds and 5% cash.

(Technical point: REST is using Macquarie Bank’s True Index funds, which use derivatives to manage their portfolio. REST say they have done their due diligence, and are comfortable with the risk).

How would these risks compare to purchasing index funds direct via Vanguard, BetaShares, UBS etc? At an extremely high level, my understanding is on top of the price of the shares themselves, you're betting on the stability of the index fund "manager". Edit: and as previously discussed, exchange rates if not hedged to AUD.

 

[amaroo]

I think the wombat is safe. Perhaps those attempting an insincere grovel face.

The Fiji and Thermomix addicted look like walking the plank.

Who would want be the Chairman or CEO at NAB.... suspect the headhunters have already received their orders and are looking for two replacements ASAP.

'We got it wrong': NAB hit by record protest vote against exec pay

National Australia Bank will tear up its executive pay structure as it faces the largest ever protest vote in Australian corporate history against management remuneration at a blue chip company.

NAB chairman Ken Henry told the bank's annual general meeting in Melbourne on Wednesday that the bank had got it wrong in terms of remuneration.

"No matter what happens here today, more than 80 per cent of the votes cast on our remuneration
report will be ‘against’."

Edit; Henry is now caught up in a travel investigation involving first class flights for him and his misses ... what a way to end a career.