Managing Superannuation

[Zeke]

I'm thinking of starting up my own superannuation trust so I can manage my own super funds. I have been advised by my accountant that it 'is not worth it' at this stage, but I can't see how it 'is worth it' to continue losing money in funds managed by other companies. I would rather lose the money myself, than watch someone else do it.

I'm thinking I'll roll in all into my own fund, and pump it all into property.

Thoughts?

 

[Rednecknow]

I have a relative in OZ running his own which he also includes one for his partner. He says it can be a daunting paper chase but otherwise hes been making 20-25% for the past 5 years mainly just on blueys.

Institutional Super in Oz sux, its just fees and more fees.

Ask your accountant where is he investing his money?

 

[peterh_oz]

Originally posted by Rednecknow
Institutional Super in Oz sux, its just fees and more fees.

Stick to industry super (NOT AMP and other private ones who have to pay shareholders etc - its YOUR money they pay them with!).

Some industry ones now take super $ from non-industry members (eg www.lgsuper.com.au)

 

[Squeak]

Can be a good thing to have control over how your retirement savings build, but they might not build at all if its pumped into the one asset class. I'd suggest that if you're going to DIY, follow the same principles used by managed super funds.

That's some 2nd year financial planning advice for ya.

 

[Zeke]

Originally posted by Squeak
Can be a good thing to have control over how your retirement savings build, but they might not build at all if its pumped into the one asset class. I'd suggest that if you're going to DIY, follow the same principles used by managed super funds.

That's some 2nd year financial planning advice for ya.

I agree in principle, however I reckon I should invest in areas I have experience in. I know nothing about shares, and am not overly interested in learning.

 

[TheGreatCoranzo]

Buy a Mac.

Or invest in Apple shares.

 

[Falchoon]

Originally posted by Zeke
I'm thinking of starting up my own superannuation trust so I can manage my own super funds. I have been advised by my accountant that it 'is not worth it' at this stage, but I can't see how it 'is worth it' to continue losing money in funds managed by other companies. I would rather lose the money myself, than watch someone else do it.

I'm thinking I'll roll in all into my own fund, and pump it all into property.

Thoughts?

5 years to late

I've never looked into it seriously but was lead to believe that your fixed costs are somewhere around $5000 per year? Auditing etc, you'd probably need $100000 minimum to make it worth your while. Maybe you can pool with others but then you lose control.

 

[Zeke]

Re: Re: Managing Superannuation

Originally posted by Falchoon
5 years to late

I've never looked into it seriously but was lead to believe that your fixed costs are somewhere around $5000 per year? Auditing etc, you'd probably need $100000 minimum to make it worth your while. Maybe you can pool with others but then you lose control.

That's what any accountant will tell you, but they are inherently conservative. The advice I have been given says that we should do it regardless.

 

[Former]

I think most financial planners will tell you $100,000 to $150,000 minimum before you start your own - and from my reading that's pretty sound advice if you don't have any financial background.

Each to his own though. If you decide to start with less tell us all how you go with it.

 

[lenny&carl]

Even if you do it yourself, you still want to put the money in at least 8 different places, with the hope of finding 5ok ones and 1 great one to make up for the two dud ones. Don't put it all in one place like property. There are some good property reits? out there, people who like lease a building to Kmart or DSS for 20 years and pay 9%. THey're ok. But property in general is not a good place to buy into right now.... the prices have been distorted upwards by the availability of cheap credit. The ability to pay back all this debt will be tested with any real move up in interest rates, or else by a general fall in income levels, i.e. if the general economy goes to $%&^. If more people can't afford these houses they've borrowed like maniacs to buy, then they'll be sold or repo-ed, triggering a concerted downward price move.

Now the $-industry and the regulators won't tell you this, but the global economy has some drastic problems, (stemming mostly from Wall St,) and Australia is part of the global economy and won't fully escape these problems. It is time to be ultra-defensive and preserve capital at all costs, rather than dangling your privates in the wind hoping to get lucky. Plenty of time for that later after a wipeout or two.

China is gaining on USA in the super power race at quite a rate. Long ways to go, but they've worked their r's off and gotten lots of money, with which they're building urban/industrial nightmares...um... I mean, they're "modernizing." This is where your money can be made today, and thankfully you don't have to set foot in the place to do it. China is sucking up commodities until they run out!

 

[Rednecknow]

Originally posted by Groves
I think most financial planners will tell you $100,000 to $150,000 minimum before you start your own - and from my reading that's pretty sound advice if you don't have any financial background.

This is because what you are doing is putting them out of a job. You dont need a hell of lot of money just the time to manage it some. Listen my relo is a tradesman, no tertiary education or accounting background, and hes managing fine.

These learned professionals dont want you to know that what they do is really quite easy and getting easier by the day with the many options of software available.

Originally posted by Rednecknow
Institutional Super in Oz sux, its just fees and more fees.

Originally posted by Peterh_oz

Stick to industry super (NOT AMP and other private ones who have to pay shareholders etc - its YOUR money they pay them with!).

Been misinterpreted here, i said Institutional Super not Industry. Institutional are big players like AMP, Westpac etc. I have had a some super in a general Westpac account and it has lost money three years in a row despite the market increasing on average 10% and far more if you are more discerning about where to put your money. Like a few have said blue chips in Oz are an excellent choice for the long term IMO

 

[Frodo]

I run my smsf and there certainly is a minimum amount you need to have to make it worth going ahead with one. However, the fees can be less than $1000 per year if simple investing is undertaken. It all depends upon how much your accountant charges and how much work he has to do.
Lets take a $100,000 amount inversted with AMP Superleader capital secure. In other words this is invested in cash and bonds. After fees you will get around 2.5% ie $2500 in earnings.
If you start your own smsf it will cost $600 to set up and $700 a year for a simple cash investment accountant. You can put the $100K in a Bankwest gold cash management account and earn 5.35% ie $5,350 less the accountant cost = $4650. But that is a lot more than a super fund.
If your happy with 5.35% it is a no hassle way of doing it, accountant does all the paerwork which is minimal. You can, of course buy property, shares etc and get a better return, but the accounting costs go up...but not that much. Property can be a pain to manage but property trusts are pretty goot, like DOT and WFA.

 

[Rooboy 34]

Originally posted by Rednecknow
This is because what you are doing is putting them out of a job. You dont need a hell of lot of money just the time to manage it some. Listen my relo is a tradesman, no tertiary education or accounting background, and hes managing fine.

These learned professionals dont want you to know that what they do is really quite easy and getting easier by the day with the many options of software available.

Not entirely correct here Redneck. No matter how simple your super fund is, you still need to get it audited by a qualified auditor. If you know someone who can audit your fund cheaply, then it may be worthwhile setting up your own SMSF, but otherwise the cost of paying an auditor can outweigh the benefit...

 

[Rooboy 34]

Originally posted by Zeke
I'm thinking of starting up my own superannuation trust so I can manage my own super funds. I have been advised by my accountant that it 'is not worth it' at this stage, but I can't see how it 'is worth it' to continue losing money in funds managed by other companies. I would rather lose the money myself, than watch someone else do it.

The reason that it is "not worth it" for small amount is that you must pay for accounting and audit fees. It is not the management fees - as someone has said, this can be done by anyone. It is the compliance that is costsly. At a minimum these are going to be $1000-$1500 if not more, so say you only have $20K in Super, then this is suddenly 5-7.5%. However the costs don't increase that much more when the value of the investments increase, so if say you had $100K, and the costs are only $2000, then you are suddenly down to 2%.

Originally posted by Zeke
I'm thinking I'll roll in all into my own fund, and pump it all into property.

Thoughts?

One thing that you might be forgetting or not realising is that a Super Fund cannot borrow money. So if you are looking to buy real property, then you are going to need big $$$ to invest. You can obviously invest in Property trusts with bugger all funds...

 

[Frodo]

Originally posted by Rooboy 34
Not entirely correct here Redneck. No matter how simple your super fund is, you still need to get it audited by a qualified auditor. If you know someone who can audit your fund cheaply, then it may be worthwhile setting up your own SMSF, but otherwise the cost of paying an auditor can outweigh the benefit...

a cheapo accountant who isn't even a CPA can audit a SMSF.

 

[Frodo]

Re: Re: Managing Superannuation

Originally posted by Rooboy 34
The reason that it is "not worth it" for small amount is that you must pay for accounting and audit fees. It is not the management fees - as someone has said, this can be done by anyone. It is the compliance that is costsly. At a minimum these are going to be $1000-$1500

That is wrong Rooboy. My total costs were $645 last year, including GST.