Using Super as an investment account?

[alexlee]

Sheryn, aren't your kids still limited by the rule that they can't access the money until they're 58 or whatever? If your kids said 'but I intend to be financially free by my 40s', would you still consider super a good vehicle to use? Alternatively, would it be better (certainly more flexible) for your kids to just save whatever they can outside super?

34k would be enough to buy a 300k IP, surely.

 

[alexlee]

The other thing one must remember is that some people will never retire as earning to much money and are happy to pay tax.

That's fair enough, but again, 'I never plan to retire' isn't a good reason to use a vehicle that locks your money away. Even if you have enough money outside super not to have to work, you can still go to work if you want. However, if you don't want to work for whatever reason, I'd prefer to have that option. With super, I don't.

To me, having money means more choices. Super limits some of those choices.

 

[Hoffy]

Retail super certainly seems to perform like one.

Those Industry Fund ads have certainly been effective haven't they. It has caused crazy generalisations to be accepted as useful. Industry funds are better - some are, many aren't. Retail funds are bad - some are, many aren't.

The ad agencies have profited very nicely from those funds "run only to profit the members."

 

[pully]

super is a complex thing and because govts like to change and meddle with the rules it can be difficult to assess how useful it will be.

not to mention the taxation aspects, contribution rules and withdrawals etc.

needs to be considered as part of personal wealth management and not just in isolation.

people need to educate themselves and seek professional advice to assist in understanding all the ins and outs and keep their knowledge current.

we live in interesting times and need all the info we can get to make decisions and avoid expensive mistakes.

 

[BayView]

i was told bankruptcy would be my best option but chose not to & am finally getting some control on my finances - I am thinking about using my Super as an investment account, similar to a managed fund + i get the governments contributions (with the plans of opening a SMSF up the track)

The first thing you need to do before you start investing is scrutinise your money-management and spending habits/patterns thus far. To be on the verge of bankruptcy as a 25 year old is an extremely bad sign (unless you made a business venture that went horribly wrong - can happen to all of us).

Thanks - i was under the impression voluntary contributions were accessible failry quickly, but im sure thats just how the Super Co's want us to think. I get the papers out & run over the small print...

The fact that you are even aware of the availability of being able to make (regular) withdrawals signals to me a deeper issue; the one that is (probably?) the root cause of your debt position and need to clear it.

Basically; spending.

The idea of super is to force the masses to make some commitment to savings so they are not entirely out on the street at retirement.

If you are able to access the contributions regularly, what do reckon most heavy spenders who are upside-down financially will do? They'll simply withdraw it and spend it.

Becoming financially free (excluding a lucky windfall, rich parents that snuff it or inventing Google and the like) involves a very simple process;

1. Spend less than you earn
2. Save 10% of what you earn
3. Invest the 10% into other assets that will provide an income return and/or capital growth..

95% of the planet fall over at steps 1. and 2., so have no hope of getting to step 3.

If all of what I've said here is on the money, my advice is to get rid of any credit cards you have immediately - cut them up and live off cash.

Next, spend 10% of your wages on minimising the debt on those cards - over and above the monthly repayments until they are cleared.

Then, start attacking the next biggest (smallest) debt - maybe a car loan? until it is gone. You allocate the same money you were plowing into the c/c repayments into the car loan - over and above it's repayments.

And so on.

Hard to do? Absolutely.

But being bankrupt is harder.

 

[reeco]

I think all this guy wants is money...When your on the verge on bankruptcy you do get desperate. All opinions fall on deaf ears and all one wants to know is how they can get more money. Even worse one usually tends to make very high risk bets to cover there asses. It happen to a friend of mine and you see it in the movies all the time.

Usually goes along the lines of

*guy gets given money from friend to drop off at bank because hes gotta be somewhere else quickly - friend1 doesnt know of friend2's financial problems - Friend2 is on the way to drop off cash at bank - friend2 walks by TAB and thinks of all the money they can make and pay friend1 off with interest!!! how greatful friend1 will be......

sjfou. I recommend you take your medicine. May taste bitter in the mouth but its great for you in the long run.

 

[sjfou]

Thanks all for the personal responses - to give you some short background, im in about $45k debt, i got into this through a failed business venture (too many commitments, not enough capital) & had 2 cars stolen from me of which i received no insurance $ & had a car that cost me to keep on the road than what i paid for it - catch 22: didnt have the $ to buy another & it was too expensive to keep

i realised how deep i was in & have worked my **** off for 4 years - 70 hours weeks over 2 job, studying a course with a 5% pass rate whilst training at a professional standard in my chosen sport, and reading everything i could on financial education in what little spare time i had. i paid off one loan today.

Now for my current situation, i was ambushed at work (bouncer) 7 months ago & got 5 damaged vertebrae out of it. I have had nothing but BS from worcover, insurance companys, banks etc. I have not received a cent from workcover & am now taking legal action against them - i estimate i am owed apx $11k in lost wages & medical expenses, paid out of my pocket & this amount increases each week. Ive also frozen my credit by having insurance claims.
However, ive maintained my day job & have a little leftover $ at the end of the week i would normally put straight onto my debt, but its frozen, so i cant pay anything off it - however, i could park it straight into my high interest savings account @ 6% or into my super @ 15%, assuming i can access it in the near future once my workcover claim is sorted. Hope that helps...

 

[sjfou]

I think all this guy wants is money...When your on the verge on bankruptcy you do get desperate. All opinions fall on deaf ears and all one wants to know is how they can get more money. Even worse one usually tends to make very high risk bets to cover there asses. It happen to a friend of mine and you see it in the movies all the time.

Usually goes along the lines of

*guy gets given money from friend to drop off at bank because hes gotta be somewhere else quickly - friend1 doesnt know of friend2's financial problems - Friend2 is on the way to drop off cash at bank - friend2 walks by TAB and thinks of all the money they can make and pay friend1 off with interest!!! how greatful friend1 will be......

sjfou. I recommend you take your medicine. May taste bitter in the mouth but its great for you in the long run.

Money to me is freedom. Im an athlete, i rather be poor & train, than be rich & never train again. My financial mistakes have restricted my potential & im doing all i can to reverse this & maximise what oppurtunities i still have at my disposal.

i understand without risk is no reward, but i do not drink alcohol, nor gamble (in societys common perception of the word - ie. on horses, pokies, cards etc.) as i have only ever seen the ugly side of both. My financial education is my medicine, the 70hr weeks picking up stab victims, ducking bottles, disarming knives & being alone in brawls of 30, 40, 50+ while everyone should be asleep was my medicine. I got injured & have joined the army reserve & I do not want to return to that life, but you gotta do what you gotta do.

 

[reeco]

Keep us posted

Would be awsome to see this turn good for you

 

[sjfou]

Cheers.

It will - because i have the desire & am willing to make the sacrifice & effort to succeed - i just help with the education side