Super - tips to grow it

[Scott No Mates]

Growing super, surely shouldn't matter what asset class you chose, as long as you are happy with the return, right? Perhaps you are seeking diversification from property, so you like managed funds, or lack the experience to invest directly into shares (another option).
I really dislike the comment that too many people are putting money into property in their SMSF? What do you mean, the statistic is that around 3.5% of SMSF have leveraged into residential property, but yes commercial is much more invested as many would involve their businesses there.
Yet most, I think at least of 60% of people's super is invested in stocks, yet no one is worried there? So I do not understand there reasoning for concern there?
Anyway best of luck in your investing......

Diversification is but one fundamental element of the long term investment plan, risk management, liquidity/accessibility of the funds are two others.

Higher returns means greater exposure to risk ie. Equities, lower returns are linked to low risk investments eg cash at bank, government bonds etc. The trade offs are security and liquidity ie you can get easy access as opposed to trying to cash out of a CIP or RIP if you require ready access to cash in the smsf eg if a member dies and the fund is forced to sell as a reluctant vendor in order to satisfy the demands on the assets. Shares can provide greater returns than cash with greater risk however are much easier to sell (@ lower transaction cost) than a direct investment in property seen as low risk but low liquidity.

 

[Scott No Mates]

I received this related article from Morningstar - interesting commentary:linky===》

 

[travelbug]

Sash, I cannot understand why you are not contributing more to Super if you can salary sacrifice.

You can add $30,00 a year.
Given your 50% tax rate this means a huge saving.

$30,000 - 15% means $25,500 in to Super.

If you don't Salary Sacrifice that $30,000 gives you $15,000 in your pocket.

$10,500 loss per year.

And you will not need to access it at 60 (or even 70) with your portfolio.

I am putting the maximum in these last few years before I retire as I don't need the income for now.

 

[Scott No Mates]

Sash, I cannot understand why you are not contributing more to Super if you can salary sacrifice.

You can add $30,00 a year.
Given your 50% tax rate this means a huge saving.

$30,000 - 15% means $25,500 in to Super.

If you don't Salary Sacrifice that $30,000 gives you $15,000 in your pocket.

$10,500 loss per year.

And you will not need to access it at 60 (or even 70) with your portfolio.

I am putting the maximum in these last few years before I retire as I don't need the income for now.

Great response TB but be wary of the limits to your own annual contributions.

The better way of phrasing it is SS leaves you with an additional $10,500 in your account compared to taking it as salary rather than a $10,500 loss.

 

[sash]

TB

It is not that high...the 30k limit for under 50s includes any contribution made by the company.

In my case there is only another -7k in contributions I can make before it hit the 30k limit the company contribute 23-24k So the potential tax saving is only 2100-2450k in tax savings.

You are closer to the access age (currently 60)....I am about 13 years away....so changes can happen before then. Whereas any govt in their right mind would grandfather things.

Sash, I cannot understand why you are not contributing more to Super if you can salary sacrifice.

You can add $30,00 a year.
Given your 50% tax rate this means a huge saving.

$30,000 - 15% means $25,500 in to Super.

If you don't Salary Sacrifice that $30,000 gives you $15,000 in your pocket.

$10,500 loss per year.

And you will not need to access it at 60 (or even 70) with your portfolio.

I am putting the maximum in these last few years before I retire as I don't need the income for now.

 

[travelbug]

TB

You are closer to the access age (currently 60)....I am about 13 years away....so changes can happen before then. Whereas any govt in their right mind would grandfather things.

Thanks for pointing that out. LOL

Yes I forgot that your employer contributions are much higher than mine so you are limited in your personal contributions. As I'm only part time my employee contributions are much lower.

Great response TB but be wary of the limits to your own annual contributions.

The better way of phrasing it is SS leaves you with an additional $10,500 in your account compared to taking it as salary rather than a $10,500 loss.

I can sacrifice $35K including employee contributions. I calculated that. Teacher at work made that mistake and got into trouble.
True- not a loss really.

 

[redwing]

Lets say....that SMSFs are complicated...the compliance matters are onerous...people who are not skilled will get themselves into trouble.

Use a professional here (compliance) rather than in the investment side

I have considered setting up a SMSF...and putting it on the top 20 bluechips with weighting on dividend paying stocks.

In the end rationalised that the experts will do it better than me because I can't devote the time...yet...maybe in the future it maybe different...though a something which I am working through...

Really

No wonder you've done so well out of property...shidd loads of income before the game starts makes a huge diff.

Good luck to you, but I think we have to put everyone's success into perspective here on SS.

I'd always assumed from reading the forum that Sash was on a pretty good wage and didn't have dependents either

 

[sash]

Yes...I am on good wage.

But to put it perspective...I was not on huge dollars when I started. My rentals are now double my income now.

My wage is equivalent of a couple on two good incomes.

It still takes time and effort to get to what I have. You made the choice to start a business...I continued with property and continue with a full time job.
It has not been without sacrifices.

No wonder you've done so well out of property...shidd loads of income before the game starts makes a huge diff.

Good luck to you, but I think we have to put everyone's success into perspective here on SS.

 

[MTR]

The super experts say you only need around $58,000 pa to retire comfortably, and there are those on SS who do this today.

Though my thoughts are if you are on a high income this may be difficult and will go against the grain??.

Here is an old thread on this for those interested.


http://somersoft.com/forums/showthread.php?t=104848

 

[sash]

I think $58k will probably be more than most AVERAGE people in OZ need IF they have paid off their mortgages and have a new car at retirement.

Why? Let say Mr & Mrs Average couple earn 110k combined and are paying a house worth off 500k at the rate of 2.3k/month and also a car loan at rate of $800/month.

Based on the above, their net income after tax is approximately 22k. So after taking out their car and house loans they have about 52k. Which is more than the amount they would have if they had paid off their home/car and are living in retiretirement.

Now some will say what about updating the house and replacing the car they age. Well...when you retire and assuming you qualify for $1 of part pension...they are significant benefits such as discounted rates, water, insurance ,etc. These will comfortably add up to 3k per year plus saving another 3k from their 58k income. If these were put into the kitty they can replace their car with a second one every 10 years and take care of any maintenance related issues as they come up.

The super experts say you only need around $58,000 pa to retire comfortably, and there are those on SS who do this today.

Though my thoughts are if you are on a high income this may be difficult and will go against the grain??.

Here is an old thread on this for those interested.


http://somersoft.com/forums/showthread.php?t=104848

 

[Sean M]

Hi Sash

Super is what I do day in and day out as a Financial adviser. A few people have mentioned some great ideas.

Key things to think about
1. Super contributions - before and after tax depending on your wage and cashflow situation
2. Making sure you invest in line with your risk profile
3. Reviewing it at least once a year if not twice
4. Seek professional advice


Using an SMSF is great for people who are self employed, want to own business real property within SMSF or want to manage their own super via shares etc.

I hope this helps.