2% return last year on my super with bussq

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Elives, 16th Sep, 2020.

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  1. Elives

    Elives Well-Known Member

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    Hi All i only have around 37k in super stopped paying it few years ago but this year will most likely play catch up and put in 75k, i just checked my last yearly statement and it made $900 approx income and like $120 in fees end result was like 2% which sounds horrible.

    is bussq a bad super? or is this the normally returns from super funds or am i doing something wrong? only fees are admin like $10 a month and a annual $20 insurance premium not sure what thats for.

    what returns are normal for super?
     
  2. marty998

    marty998 Well-Known Member

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    Worst economic conditions in a century and your investments went up in value.

    What a time to be alive.

    Returns go up and down in any given year. Super is invested for the long term so there will be periods it will do well and periods where it won’t.

    Doesn’t mean you have a bad fund.
     
  3. Shogun

    Shogun Well-Known Member

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    Seek proper financial advice. Might be better to salary sacrifice $25k a year for 3 years rather than $75k in one hit
     
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  4. kierank

    kierank Well-Known Member

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    By last statement, I assume you mean 1-Jul-19 to 30–Jun-20.

    If that is true, then it includes the COVID crash, assuming you are invested in shares. If you are, then 2% return for the year isn’t too bad IMHO.

    Have you checked how your Super has performed in the first 11 weeks of this financial year?

    Hopefully your total returns are around twice the 2% you achieved last FY. That is, around 4% to 5%
     
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  5. Elives

    Elives Well-Known Member

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    haven't done last 2 years so this year etc would be 75k but over 3 years
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If you had invested 3 years ago the income would be very different . Super wont pay results because you add money yesterday. Its about compound growth. Your view is typical of sole traders who can opt in to super. They dont and have low balances. Then dont have any and moan about the problems with super. Nobody other than retirees cares about individual year returns

    If you have $20K in super a 20% return is not that much. A $2m balance very different
     
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  7. Firefly99

    Firefly99 Well-Known Member

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    We have had some of the worst economic conditions since the Great Depression. A 2% return is great . As another poster said, depending on your marginal tax rate and expected income over the next couple of years you might be better off putting in less than $75k now and adding some of that next FY.
     
  8. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Many people were expecting huge negative returns in 2020 based on the final quarter. However markets in AU and USA rose signiifcantly in the first 6 months which greatly offset the initial covid related fall and then its been a partial gradual climb back.
    Super fund performance over 28 financial years (to June 2020)

    This can be looked at two ways:
    1. You lost all the prior gains. That is a loss. The fund actually may have fallen 20% v December 2019
    2. The annualised gain was moderate. This really ignores the fact that your super did go up and then fell

    Nobody is permitted to salary sacrifice $75K (without penalties). A non-concessional contribution of $75K is permitted for many but then is preserved.
     
  9. Firefly99

    Firefly99 Well-Known Member

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    Why can’t someone salary sacrifice $75k? The OP said they had not made any contributions for 2 years, so wouldn’t $25K roll over each year, plus this years limit of $25k (total of $75k available to salary sacrifice)?

    The ATO website explains this clearly under the section ‘Carry-forward concessional contributions’

    Super contributions - too much can mean extra tax
     
    Last edited by a moderator: 18th Sep, 2020
  10. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You cant. Read the rules..hint...dates.

    Catch up allows perhaps 50k.
     
    Last edited by a moderator: 18th Sep, 2020
  11. Firefly99

    Firefly99 Well-Known Member

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    $25k cap for the 18/19 FY
    $25k cap for the 19/20 FY
    $25k cap for the 20/21 FY
    Hence someone can contribute $75k in 20/21 if they did not make any contributions in the previous two years.
     
    Last edited by a moderator: 18th Sep, 2020
  12. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Can they? ....there is more to this.

    The taxpayer will need taxable income above 115k before the deduction. Without a employer. You said...salary sacrifice. Impossible
     
  13. Firefly99

    Firefly99 Well-Known Member

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    It is very much doable and my husband did this due to high income and it being solely foreign income with no super paid by employer. Glad you’re not my accountant... ;)
     
  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If foreign income how did salary sacrifice work? You are mixing stories. Given salsac requires certain conditions be met by a employer there will be 9.5% sgc. It would be impossible to salsac 75k and be a concessional contribution within caps if also employed...only a sole trader or personal taxpayer not employed etc...hence no sal sac
     
    Last edited: 17th Sep, 2020
  15. Firefly99

    Firefly99 Well-Known Member

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    You started using the term salary sacrifice. The OP said they wanted to put $75k in after not for contributing for several years and you said that no one can salary sacrifice $75k. And didn’t say that $75k of concessional contributions were allowed, implying that what they wanted to do was not possible. Which was my point, $75k is possible.
     
  16. The Y-man

    The Y-man Moderator Staff Member

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    Incorrect - @Shogun used the term first in post #3, to which @Paul@PFI responded.

    The Y-man
     
  17. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Sometimes. Rarely. A employee. A person with smsf. A persons age. A person with taxable income under 115k...etc all prevent this then there are deduction notices...preservation. .... Notices... All are factors.

    They ..op....would not be assumed to be non resident or not employed.

    Difference between advisers and random posts involve responsible posts i guess.

    Read shogun....also refers to fin advice. Anyone with 30k super who hasnt contributed who queries a earning rate and want to contribute 75k prob needs to consider more factors... Eg op contributes 75k and lodges tax. Ato deduction notice requirements in s290.170 not met. Its now not a concessional contribution ooops. Ato cant ignore the laws that requires the notice is available when lodged...and if member rolls over starts a pension its all fatal.

    Responsible advice or reckless?
     
    Last edited by a moderator: 18th Sep, 2020
  18. Alex Straker

    Alex Straker Financial Life Coach Business Member

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    As many here have mentioned, a small snapshot in time like this does not have a lot of 'meaning'. Can get a much better sense of how well the Super assets are performing taking a longer term view.

    Super is simply a trust vehicle and is neither 'good or bad' in itself, what most people are referring to in asking about performance is the asset allocation within the Super...and that of course is a choice that can be changed any time. Various Supers offer you different levels of choices and control of the asset allocation.

    The 'cheaper' the Super, normally the less choices and flexibility you have and the portfolio choices become more like tick a box to nominate 'vanilla or chocolate' portfolio. Worth getting some help/advice in this area as there are low cost solutions that do offer increased control and flexibility. The $20 insurance premium most likely means you have some standard Life and/or TPD and/or IP cover inside the Super, need to examine the statement, or give them a call, or get professional help to get a full explanation of this.

    'Normal' returns for Super are hard to define because 'Super' as a trust can contain such a wide choice of various assets within it, there is no 'standard' return. In terms of specific market returns, ASIC's guideline expectations for FP's for a quality 'pure stocks' portfolio is currently sitting at 8.5% (ASIC own words for this is expectation of a lower growth environment going forward). Anything not consisting of 'pure stocks' will generally have a lower expectation that this so expectation get's watered down from that figure depending on how much of the portfolio is allocated to more 'defensive' areas such as bonds and cash.

    Q for OP: What kind of long term return are you looking to target?
     
  19. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The problem with 2020 is that up to March most funds have XX% growth and income returns. Then COVID happened with major losses. In May - June the markets rallied back and largely most showed a minor return. And since then returns have further been "better".....It also depends what strategy you elect eg growth or cash. Cash is probably a 0.0X return. at best. And wont get any upside whatsoever. Those who swicthed from growth to cash were particularly affected and remain so.

    ASIC have some wonderful guidance on "strategies". They also mention the risk issues and how a investor might expect losses once in XX years in each option.
    Choose your investments - Moneysmart.gov.au
     
  20. qak

    qak Well-Known Member

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    2% for 2020 is pretty good for a shocker of a year. As a comparison - AustralianSuper Balanced did 0.52%.

    This FYTD the same option is 4.72%.