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#1 2016-10-20 05:54:06

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Superannuation 'investment strategies'

Today, I went online at my super fund's site and switched my money from 'Balanced' to 'Income Focused'. I did this because I am approaching retirement and wanted to adopt a lower risk profile (mostly because, if my super plunged in value, there is little or no time left to build it up again).

The choices with my super fund are 'Aggressive', 'Balanced', 'Income Focused' and 'Cash', in decreasing order of risk profile. I wasn't game to switch it all into cash just yet, though I was tempted.

The principal difference between Balanced and Income Focused is the latter is less exposed to equities, but it also puts more of my money into property and cash.

I could alternatively split the balance between Income Focused and Cash if I wanted to reduce risk still further while maintaining some upside potential.

I am 60yo with a range of health problems that might mean I retire within the next year or two.

In my circumstances, what would you do and what are your opinions regarding the typical investment options available in super?

Last edited by SteveS (2016-10-20 06:14:14)


I intend to live forever. So far, so good.

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#2 2016-10-20 06:09:06

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,637
Trades :   232 

Re: Superannuation 'investment strategies'

Are there fee differences between different strategies?


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#3 2016-10-20 06:13:25

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Re: Superannuation 'investment strategies'

House wrote:

Are there fee differences between different strategies?

Yes, but not huge differences. The new option will be around $250p.a. lower.


I intend to live forever. So far, so good.

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#4 2016-10-20 06:34:19

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

SteveS wrote:

I could alternatively split the balance between Income Focused and Cash if I wanted to reduce risk still further while maintaining some upside potential.
I am 60yo with a range of health problems that might mean I retire within the next year or two.
In my circumstances, what would you do and what are your opinions regarding the typical investment options available in super?

In that case split between Income Focused and Cash, or just go cash. The stock markets are already high bordering on crashing depending upon who you ask, and so is property in many cases.
i.e. more downside than upside left really, especially within a year or two.
At this stage you should be pouring everything you have into super as it will be tax advantageous.
Perhaps even consider switching to a SMSF and then you have total control over every cent. This can be important if you have health issues and need the money. There are many news reports about very or terminally ill people getting the run-around from the super funds and not being able to get their money. If you have a SMSF then you don't have to deal with anyone or ask permission.

But I don't personally know about SMSF as an actual retiree. Here is some info:
https://www.ato.gov.au/uploadedFiles/Co … 352279.pdf

Last edited by SilverDJ (2016-10-20 06:37:22)

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#5 2016-10-20 06:37:04

SteveS
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From: Brisbane
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Re: Superannuation 'investment strategies'

For clarity, when I talk about moving funds into 'Cash' I am still leaving it in my super fund, not withdrawing it.


I intend to live forever. So far, so good.

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#6 2016-10-20 06:42:25

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Re: Superannuation 'investment strategies'

These are the differences. Obviously, the 'Cash' option is exactly what it says.


Asset class    Allocations

Balanced: (my previous choice)
Equities    45.00%
Infrastructure    1.00%
Fixed interest    14.00%
Other    15.00%
Cash    15.00%
Property    10.00%

Income Focused: (my new choice)
Equities    15.00%
Property    24.00%
Infrastructure    1.00%
Fixed interest    20.00%
Other    10.00%
Cash    30.00%


I intend to live forever. So far, so good.

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#7 2016-10-20 06:49:19

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

SteveS wrote:

Income Focused: (my new choice)
Equities    15.00%
Property    24.00%
Infrastructure    1.00%
Fixed interest    20.00%
Other    10.00%
Cash    30.00%

These days fixed interest essentially = cash, so you have 50% in cash, that's pretty safe.

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#8 2016-10-20 07:02:29

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,637
Trades :   232 

Re: Superannuation 'investment strategies'

SteveS wrote:
House wrote:

Are there fee differences between different strategies?

Yes, but not huge differences. The new option will be around $250p.a. lower.

Not bad. I suppose the compounding effects of fees wouldn't have much an impact if you're retiring in 2-3 years.

Who's your Super with, AusSuper?

Ps 'reported to the Godly Pantheon' lol


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#9 2016-10-20 16:38:42

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Re: Superannuation 'investment strategies'

House wrote:

.......Who's your Super with, AusSuper?......

PSSap.


I intend to live forever. So far, so good.

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#10 2016-10-20 17:05:25

Old Codger
Silver Stacker
Registered: 2011-05-13
Posts: 5,128

Re: Superannuation 'investment strategies'

'Income Focused'.

Translation,  Greek, Spanish, Venezuelan, Zimbabwe, and Italian Sovereign Bonds!


OC


"The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields."   -  ALP Constitution.

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#11 2016-10-20 18:04:23

House
Moderator/ Legend
From: Stack City
Registered: 2012-04-30
Posts: 9,637
Trades :   232 

Re: Superannuation 'investment strategies'

Old Codger wrote:

'Income Focused'.

Translation,  Greek, Spanish, Venezuelan, Zimbabwe, and Italian Sovereign Bonds!


OC

roll

You need a hobby OC tongue


WBI- 41.16

"There's no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years". Steve Keen, 2008.
Stacker FAQ'S. New threads welcome- http://forums.silverstackers.com/topic- … faq-s.html

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#12 2016-10-20 18:37:30

Old Codger
Silver Stacker
Registered: 2011-05-13
Posts: 5,128

Re: Superannuation 'investment strategies'

Got one!


"The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields."   -  ALP Constitution.

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#13 2016-10-20 18:59:51

sammysilver
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From: Sydney
Registered: 2011-04-07
Posts: 5,482
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Re: Superannuation 'investment strategies'

Rather than a hypothetical, I am 65 and a while ago I moved all my super to cash. I think when the SHTF all other options will collapse in a screaming heap.


The price we pay for the good life is public servitude.

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#14 2016-10-20 19:29:07

Old Codger
Silver Stacker
Registered: 2011-05-13
Posts: 5,128

Re: Superannuation 'investment strategies'

Agree!


"The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields."   -  ALP Constitution.

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#15 2016-10-20 20:21:21

GoldenEye
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From: Melbourne, Australia
Registered: 2014-12-30
Posts: 588
Trades :   33 

Re: Superannuation 'investment strategies'

sammysilver wrote:

Rather than a hypothetical, I am 65 and a while ago I moved all my super to cash. I think when the SHTF all other options will collapse in a screaming heap.

So what form of cash are people using? My SMSF auditor has frowned on the idea of a SDB full of $100 bills. sad

Last edited by GoldenEye (2016-10-20 20:21:55)

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#16 2016-10-20 21:32:44

SteveS
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From: Brisbane
Registered: 2016-08-06
Posts: 955
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Re: Superannuation 'investment strategies'

I wonder if super schemes actually have to keep the required amount of cash on deposit, equivalent to members' cash in super? In other words, if a member chose to have $400K of his super invested in cash instead of equities, would they sell $400K of equities and put the cash on deposit, or is it just dealt with in ledgers?


I intend to live forever. So far, so good.

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#17 2016-10-20 21:36:58

mmm....shiney!
Silver Stacker
From: 昆士蘭
Registered: 2010-11-15
Posts: 15,952
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Re: Superannuation 'investment strategies'

GoldenEye wrote:
sammysilver wrote:

Rather than a hypothetical, I am 65 and a while ago I moved all my super to cash. I think when the SHTF all other options will collapse in a screaming heap.

So what form of cash are people using? My SMSF auditor has frowned on the idea of a SDB full of $100 bills. sad

Probably because it doesn't "work" for you. It's just sitting there depreciating.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#18 2016-10-20 22:13:13

GoldenEye
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From: Melbourne, Australia
Registered: 2014-12-30
Posts: 588
Trades :   33 

Re: Superannuation 'investment strategies'

mmm....shiney! wrote:
GoldenEye wrote:

So what form of cash are people using? My SMSF auditor has frowned on the idea of a SDB full of $100 bills. sad

Probably because it doesn't "work" for you. It's just sitting there depreciating.

Nope, I'm allowed to have poorly performing investments and even lose money. They also don't like gold or silver coins, but allow gold and silver bars, and paper PMs such as unallocated.

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#19 2016-10-20 22:42:15

mmm....shiney!
Silver Stacker
From: 昆士蘭
Registered: 2010-11-15
Posts: 15,952
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Re: Superannuation 'investment strategies'

^ sounds like you've got yourself a psychopathic auditor. hmm

Tell em to f*#k off and find another one.


The woolgrower's target shall be the good thriving of his flock and its pastures, and so of himself and those whose livelihoods depend on his enterprise.
"The Woolgrower's Companion", 1906.

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#20 2016-10-28 00:31:15

Elemental
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From: WA
Registered: 2011-05-21
Posts: 1,070
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Re: Superannuation 'investment strategies'

The auditor needs to satisfy themselves as to the existence of an asset and because the cash component is probably a material amount of the overall asset balance it is something they will want to look at.

There's no way (short of actually going out to the SDB with you) of getting any certainty that the cash is actually there and you haven't been using it like a piggy bank. Personally I'd by fine with it as long as you were happy to pay for the time it takes for me to go out there and count the cash. It would definitely increase the cost of the audit (probably double it or more). Cash in the bank means a verification from the bank can be provided in about 5 minutes.

It would also depend on if it complies with the investment strategy and I doubt it would - as I assume the strategy doesn't say "I wish to achieve returns of 0% on my investments".

Do your own due diligence this is not financial advice and you need to speak to a professional about your specific circumstances etc.

Cheers


If you want to be a Millionaire, start with a billion dollars and launch a new airline - Richard Branson

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#21 2016-10-28 02:03:03

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

sammysilver wrote:

Rather than a hypothetical, I am 65 and a while ago I moved all my super to cash.

All fiat? No metal?

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#22 2016-10-28 02:10:46

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

GoldenEye wrote:
mmm....shiney! wrote:
GoldenEye wrote:

So what form of cash are people using? My SMSF auditor has frowned on the idea of a SDB full of $100 bills. sad

Probably because it doesn't "work" for you. It's just sitting there depreciating.

Nope, I'm allowed to have poorly performing investments and even lose money. They also don't like gold or silver coins, but allow gold and silver bars, and paper PMs such as unallocated.

They can't stop you having gold or silver coins, you just have to have the requisite insurance to be compliant because they are deemed to be "collectables".
There is also AFAIK no way they can legally stop a SMSF from keeping cash in a SDB. But even if you minuted it properly it would raise a red flag and you'd get the rubber glove treatment.

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#23 2016-10-28 02:48:35

SteveS
Member
From: Brisbane
Registered: 2016-08-06
Posts: 955
Trades :   

Re: Superannuation 'investment strategies'

So far, the switch hasn't worked out very well, though only marginally. In the week since I switched, my previous fund has grown a touch, while my new fund has shrunk a little. Not enough to be a drama, but if the sharemarket takes a big tumble at some point and my new fund doesn't hold up, I'll be miffed. I wouldn't necessarily think I'd done the wrong thing, because this is all about security rather than growth, but I'll be cross if I still see falls on poor sharemarket days but don't see gains when things are going good.

Last edited by SteveS (2016-10-28 02:59:55)


I intend to live forever. So far, so good.

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#24 2016-10-28 03:12:42

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

Elemental wrote:

It would also depend on if it complies with the investment strategy and I doubt it would - as I assume the strategy doesn't say "I wish to achieve returns of 0% on my investments".

It's a self managed super fund for a reason, so you get to decide how to invest the money. If your strategy is 100% cash or 100% gold then you simply document that and the reasons you think why. It could be as batshit crazy a reason as you like. You could harp on for 100 pages about the Illuminati, market manipulation, hollow earth aliens invading etc. No one gets to judge your reasons, as long as you document them then you are compliant.

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#25 2016-10-28 03:14:53

SilverDJ
Member
From: Australia
Registered: 2014-11-01
Posts: 2,528

Re: Superannuation 'investment strategies'

SteveS wrote:

I wonder if super schemes actually have to keep the required amount of cash on deposit, equivalent to members' cash in super?

I doubt it. If they use a bank to store it then the bank doesn't hold the actual cash due to fractional reserve lending.
I can't imagine super funds being any different.

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