Superannuation Discussion + market volatility

[exceladdict]

Isn't this true for most financial institutions?

I struggle to understand how a fund can lose money but still pay executive bonuses.

I don't remember the full story but do remember the US government bailouts in 2008-2009 and some financial institutions were using the money for the bailout to pay executive bonuses. Disgusting.

In a recent Freakonomics Podcast Jack Welch recalls a time a company lost $400M and someone had the nerve to ask him if it would affect their bonus.

Despite watching The Big Short nothing made me realise how greedy some in that industry are more quickly.

 

[Quickstatus]

Bonuses are an interesting beast.
Once given, it will be expected every year.

Our professional association strongly advised against any Christmas bonuses for staff because of that expectation.

Better to pay appropriately

Small Christmas gifts Ok

 

[PLANT]

Yeah what's a small Xmas gift?
I'm lucky if I get Xmas day off as my gift!!!

 

[Quickstatus]

Yeah what's a small Xmas gift?
I'm lucky if I get Xmas day off as my gift!!!

“Nominal”

 

[JohnK]

Yeah what's a small Xmas gift?
I'm lucky if I get Xmas day off as my gift!!!

A hamper including leg ham and a bottle of scotch or whatever spirit you want? Had that for a number of years at one of my jobs in the 90's.

 

[exceladdict]

Following all of this conversation I've continued to do some research based on the ETFs available within ING Direct. My objectives are basically long term growth and a weighting towards ethical/sustainable indexes. Can I ask the AFF brains trust to poke holes in this allocation? i.e. are there any risks with too higher weightings towards some industries/fund managers/countries? Erring on the side of "point out the flaws" instead of providing financial advice.

"Ethical" Indexes - 40% -(20% Intl 20% Aus)
10% ETHI (BetaShares Global Sustainability Leaders), 10% UBW (UBS World Ethical ex AUS), 15% UBA (UBS Australia Ethical), 5% RARI (Russell Australia Responsible Investment)

Low Cost Indexes - 30% (20% Aus 10% Intl)
20% VAS (Vanguard Australian Shares Index), 10% VEU (Vanguard World Ex USA)

Cash / Fixed Interest / Term Deposits - 30%
5% GOVT (SPDR Australian Government Bond Fund)
25% via ING's pre-managed options

 

[deebens]

Are those international options currency hedged? That would be my only suggestion to lower volatility.

 

[cove]

I am looking forward to this years tax refund from franked dividends in our SMSF. There is one politician who thinks he can grab that money if he wins an election. I was thinking bugger off.

 

[Cossie]

A slightly different question, the boss has retired and her previous advisor has retired as well so we took the oportunity to close that super account and open one with Aus super, that's where my private one is as well, so we did this to tidy things up.
Anyway, her money from the old account was rolled over into the new one, interestingly enough there is a difference of several thousand dollars from what was meant to have been rolled over and what is now in the new fund.
Is this normal? Would it be worth questioning this or would I be correct in asuming that the difference has gone in 'fees' somewhere?

 

[QF WP]

@Cossie, you should get a final statement from the closing fund showing all calculations.

When was the valuation you took versus what was the date of closure (when all requirements received by fund) - even a single day can make a difference as all investments should be priced daily.

The amount initially received by AustSuper should be the same amount (before fees) as the closing statement from the previous super fund.

 

[Flying mermaid]

A slightly different question, the boss has retired and her previous advisor has retired as well so we took the oportunity to close that super account and open one with Aus super, that's where my private one is as well, so we did this to tidy things up.
Anyway, her money from the old account was rolled over into the new one, interestingly enough there is a difference of several thousand dollars from what was meant to have been rolled over and what is now in the new fund.
Is this normal? Would it be worth questioning this or would I be correct in asuming that the difference has gone in 'fees' somewhere?

costs nothing to question - they should be detailing what the difference is. Probably is fees but you can query those as well once you have the details.

Aus Super seems good - I put all my kids into Hostplus, but it seemed much of a muchness with Aus Super. We now have a teacher, a doctor and a software developer all contributing to a hospitality industry fund. Well Master FM doesn’t anymore he has a thing called a 401(k) now. I’ll have to watch the Government doesn’t try to nick his Hostplus money and claim it is lost.

 

[QF WP]

costs nothing to question - they should be detailing what the difference is. Probably is fees but you can query those as well once you have the details.

Aus Super seems good - I put all my kids into Hostplus, but it seemed much of a muchness with Aus Super. We now have a teacher, a doctor and a software developer all contributing to a hospitality industry fund. Well Master FM doesn’t anymore he has a thing called a 401(k) now. I’ll have to watch the Government doesn’t try to nick his Hostplus money and claim it is lost.

To anyone that doesn’t know the terminology, 401K is the US version of a superannuation (pension) fund, but with vastly difference rules.

Ensuring the postal address of the HostPlus fund is current (valid), will ensure it doesn’t get on the Lost Super register.

 

[exceladdict]

Following all of this conversation I've continued to do some research based on the ETFs available within ING Direct. My objectives are basically long term growth and a weighting towards ethical/sustainable indexes. Can I ask the AFF brains trust to poke holes in this allocation? i.e. are there any risks with too higher weightings towards some industries/fund managers/countries? Erring on the side of "point out the flaws" instead of providing financial advice.

"Ethical" Indexes - 40% -(20% Intl 20% Aus)
10% ETHI (BetaShares Global Sustainability Leaders), 10% UBW (UBS World Ethical ex AUS), 15% UBA (UBS Australia Ethical), 5% RARI (Russell Australia Responsible Investment)

Low Cost Indexes - 30% (20% Aus 10% Intl)
20% VAS (Vanguard Australian Shares Index), 10% VEU (Vanguard World Ex USA)

Cash / Fixed Interest / Term Deposits - 30%
5% GOVT (SPDR Australian Government Bond Fund)
25% via ING's pre-managed options

Are those international options currency hedged? That would be my only suggestion to lower volatility.

I don't think any of them are. Thanks, will investigate - and very open to other suggestions

 

[bismarck]

Following all of this conversation I've continued to do some research based on the ETFs available within ING Direct. My objectives are basically long term growth and a weighting towards ethical/sustainable indexes. Can I ask the AFF brains trust to poke holes in this allocation? i.e. are there any risks with too higher weightings towards some industries/fund managers/countries? Erring on the side of "point out the flaws" instead of providing financial advice.

"Ethical" Indexes - 40% -(20% Intl 20% Aus)
10% ETHI (BetaShares Global Sustainability Leaders), 10% UBW (UBS World Ethical ex AUS), 15% UBA (UBS Australia Ethical), 5% RARI (Russell Australia Responsible Investment)

Low Cost Indexes - 30% (20% Aus 10% Intl)
20% VAS (Vanguard Australian Shares Index), 10% VEU (Vanguard World Ex USA)

Cash / Fixed Interest / Term Deposits - 30%
5% GOVT (SPDR Australian Government Bond Fund)
25% via ING's pre-managed options

Very little US exposure? Was that deliberate?

 

[exceladdict]

Very little US exposure? Was that deliberate?

Forgive me if this is ill-informed, but I believe the two world ethical funds are US heavy (70-75%) which is why I was looking to the world ex US elsewhere. That said, I have no idea what a good benchmark would be?

 

[Flying mermaid]

To anyone that doesn’t know the terminology, 401K is the US version of a superannuation (pension) fund, but with vastly difference rules.

Ensuring the postal address of the HostPlus fund is current (valid), will ensure it doesn’t get on the Lost Super register.

I will need to check that with him - he did have a valid one but there have been some changes since Christmas- I might ask him to change it to my address.

Wasn’t there something with inactive accounts of less than x dollars being swept away from the funds and into the “care” of the government?

 

[voulez]

Following all of this conversation I've continued to do some research based on the ETFs available within ING Direct. My objectives are basically long term growth and a weighting towards ethical/sustainable indexes. Can I ask the AFF brains trust to poke holes in this allocation? i.e. are there any risks with too higher weightings towards some industries/fund managers/countries? Erring on the side of "point out the flaws" instead of providing financial advice.

"Ethical" Indexes - 40% -(20% Intl 20% Aus)
10% ETHI (BetaShares Global Sustainability Leaders), 10% UBW (UBS World Ethical ex AUS), 15% UBA (UBS Australia Ethical), 5% RARI (Russell Australia Responsible Investment)

Low Cost Indexes - 30% (20% Aus 10% Intl)
20% VAS (Vanguard Australian Shares Index), 10% VEU (Vanguard World Ex USA)

Cash / Fixed Interest / Term Deposits - 30%
5% GOVT (SPDR Australian Government Bond Fund)
25% via ING's pre-managed options

An example of a 70%/30% growth/defensive "market benchmark" fund would be the Vanguard Diversified Growth Fund which presently allocates to Aus large caps (28%), Aus small caps (5%), international shares (33% hedged and unhedged), emerging markets (4%), international bonds (21%) and Aus bonds (9%). Relative to that, your allocation would be underweight international shares (and by default, US which makes up 60% of the international shares index), emerging markets, Aus small caps and bonds (significantly); and overweight Aus large caps and cash (significantly). No right or wrong answer here.

A competent financial advisor would take into account your assets outside super (how correlated are their performance relative to the asset classes above), your risk tolerance, access to super, etc. For example, all the following factors would impact how I invest my super: a large cash balance outside super; a business dependent on the US economy; $300k worth of NAB and BHP shares; two investment properties; me being able to access super in 5 years vs 15 years.

 

[voulez]

Wasn’t there something with inactive accounts of less than x dollars being swept away from the funds and into the “care” of the government?

I think any inactive (12 months?) accounts with $6,000 or less gets transferred out. Should be relatively easy to track via mygov if the TFN details were accurate.

 

[bismarck]

Forgive me if this is ill-informed, but I believe the two world ethical funds are US heavy (70-75%) which is why I was looking to the world ex US elsewhere. That said, I have no idea what a good benchmark would be?

Ah yes, I hadn't checked the underlying holdings. They are US heavy.

I'm interested that Exxon Mobil is in the UBS ethical fund. Just goes to show that everyone's ethics is different I guess.

Will also be interesting to see how Tesla and First Solar both impact the Betashares one.

 

[Flying mermaid]

I think any inactive (12 months?) accounts with $6,000 or less gets transferred out. Should be relatively easy to track via mygov if the TFN details were accurate.

thanks will keep an eye on that. He is over that at the moment, but no doubt the amount will increase over time.....it’s been inactive for about 4 years now.