Accessing your super early

[VYBerlinaV8]

http://www.aussiestockforums.com/forums/showthread.php?t=24666

43 pages of pretty good reading, including many snippets over issues raised in this thread.

pinkboy

Some very interesting comments there.

I'm still torn on whether to do a SMSF. I have just under $200k sitting in an industry super fund with all of the super in the most aggresive growth option. But given the cost and hassle, and inevitable future scrutiny of SMSFs I'm struggling with the risk management. What are the real risks? What can be done to mitigate them?

 

[Terry_w]

Some very interesting comments there.

I'm still torn on whether to do a SMSF. I have just under $200k sitting in an industry super fund with all of the super in the most aggresive growth option. But given the cost and hassle, and inevitable future scrutiny of SMSFs I'm struggling with the risk management. What are the real risks? What can be done to mitigate them?

Main risk is investment stuff ups. Are you a good investor?

 

[VYBerlinaV8]

Main risk is investment stuff ups. Are you a good investor?

Yes, I think so. I am happy to invest across decades while achieving a sensible and reasonably consistent return. I don't day trade or speculate, and have a focus on dividend reinvestment to take advantage of compounding over time.

What worries me is embarking on a strategy only to have government change the rules and bugger my plan.

 

[cimbom]

I've never heard that one. Recently there was a lot of bad press about people who rack up large HECS debts and then go and work overseas, never having to pay it back.

That's what happens when funding for science, research and technical organisations gets cut. People either move overseas or stay unemployed. Every "saving" has a price

 

[oracle]

I'm still torn on whether to do a SMSF. I have just under $200k sitting in an industry super fund with all of the super in the most aggresive growth option. But given the cost and hassle, and inevitable future scrutiny of SMSFs I'm struggling with the risk management.

I am in similar boat to you and decided to setup SMSF using esuperfund. Setup and first year fees are free. They do all the setup including brokerage account. Choice of Commsec or E-Trade.

My investments within the SMSF are very simple and boring. Everything is invested in low cost index ETF from Vanguard. No margin loans. Only costs is brokerage when I buy once every quarter. esuperfund receives transaction files from the banks directly EOFY so there is hardly much work involved from your end. Due to the fixed fee structure of esuperfund as the fund value increases your costs as a % will keep going down year after year.

Cheers,
Oracle.

 

[Terry_w]

Yes, I think so. I am happy to invest across decades while achieving a sensible and reasonably consistent return. I don't day trade or speculate, and have a focus on dividend reinvestment to take advantage of compounding over time.

What worries me is embarking on a strategy only to have government change the rules and bugger my plan.

But that would apply to retail superannuation funds as well.

 

[VYBerlinaV8]

But that would apply to retail superannuation funds as well.

Yes!

This is partly why I'm still not sure which way to go. My costs currently are 0.81%pa, which is very cheap, IMO.

The real question is can I do better? At this point I'm not sure I can.

 

[bob246810]

Oh well, looks like the only thing to do is to switch to a decent fund (short of financial ruin or dying, both of which seem to have a few downsides). Over time, as I get more comfortable with managing my own investments, I might consider going to a SMSF.

 

[TPI]

Yes!

This is partly why I'm still not sure which way to go. My costs currently are 0.81%pa, which is very cheap, IMO.

The real question is can I do better? At this point I'm not sure I can.

Hi VYBerlinaV8,

I think we discussed a similar topic before, if the money's already in there (and it is your money, even though your employer made most of the contributions) you may as well take control of it and make the most of it, financially and from a long-term learning/educational point of view.

It doesn't really take much time if you adopt a relatively passive approach and whether you pick individual stocks, LICs, ETFs or index funds.

If you're 35 now, by the time you're 70+, you will have had 35+ years of experience in investing and managing your own long-term retirement fund and future inheritance for your family.

If you think you're a good investor now, you're surely going to be a lot better in time if you pursue this self-directed path.

And the knowledge and experience you gain from this can help you improve your investing outside super as well.

The proviso though is that you have a certain minimum amount of knowledge and an appropriate strategy/plan in place on how to initially invest before doing so, and it sounds like you probably already do.

As oracle mentions, the costs are much cheaper these days.

You would pay about $1000 pa in fees for accounting/audit/levy/ASIC fees with a low-cost SMSF administrator like e-superfund, plus brokerage on top of this, so maybe $1200 pa depending on how often you trade.

This works out to be just 0.6% of your $200k balance... so even less than what you are paying now.

Add your wife's super balance into the mix and the next 12 months of employer contributions for both of you and it will be even less than this.

Personally, I ignored all the usual advice on this subject and started my own SMSF with just 30k! - though the balance and my own confidence investing in the stockmarket has improved significantly since.

 

[VYBerlinaV8]

Hi VYBerlinaV8,

I think we discussed a similar topic before, if the money's already in there (and it is your money, even though your employer made most of the contributions) you may as well take control of it and make the most of it, financially and from a long-term learning/educational point of view.

It doesn't really take much time if you adopt a relatively passive approach and whether you pick individual stocks, LICs, ETFs or index funds.

If you're 35 now, by the time you're 70+, you will have had 35+ years of experience in investing and managing your own long-term retirement fund and future inheritance for your family.

If you think you're a good investor now, you're surely going to be a lot better in time if you pursue this self-directed path.

And the knowledge and experience you gain from this can help you improve your investing outside super as well.

The proviso though is that you have a certain minimum amount of knowledge and an appropriate strategy/plan in place on how to initially invest before doing so, and it sounds like you probably already do.

As oracle mentions, the costs are much cheaper these days.

You would pay about $1000 pa in fees for accounting/audit/levy/ASIC fees with a low-cost SMSF administrator like e-superfund, plus brokerage on top of this, so maybe $1200 pa depending on how often you trade.

This works out to be just 0.6% of your $200k balance... so even less than what you are paying now.

Add your wife's super balance into the mix and the next 12 months of employer contributions for both of you and it will be even less than this.

Personally, I ignored all the usual advice on this subject and started my own SMSF with just 30k! - though the balance and my own confidence investing in the stockmarket has improved significantly since.

Thanks for taking the time to reply, you've definitely given me some things to think about.

 

[Terry_w]

Yes!

This is partly why I'm still not sure which way to go. My costs currently are 0.81%pa, which is very cheap, IMO.

The real question is can I do better? At this point I'm not sure I can.

Work out what the dollar costs are and then compare to that of running a SMSF - audit, tax return etc

Conisder that your fund will be increasing each year with growth and more contributions too.

But it is not all about costs but about control - estate planning for you, yourself and your family. Many tax benefits and other death related benefits - see my thread on Super and Death.