Ideal Passive Income Portfolio for Retirement - advice from forum experts

Being in Pension mode I’m very rusty on this stuff so hopefully others will correct me if I’m wrong.

I don’t think that will solve the problem as the Retail / Industry “Accumulation” Trust will need to sell your units then roll the proceeds over to your SMSF. So CGT still applies.

 

Interesting. I have a SMSF and only one holding VAS ETF with DRP ticked. So are you saying with SMSF their are no CGT when transferring to pension fund?

Cheers
Oracle

 

Yes, as long as it remains in the same Trust being the SMSF. Nothing changes. No assets sold. Just some paperwork to start the Pension (s). Magic.

 

So does CGT also apply if one converts from industry / retail to SMSF at any time?

 

@Nodrog, @SatayKing and others.
It's been an interesting thread to follow.
A noob here trying to learn.

I have been browsing Argo website to learn more about LIC.
Is there any correlation between Share Tangible Assets (STA) $7.95 and the share price $8.29 ?

As mentioned in Argo web, dividend paid is 16 cents for 2017.

Picture above which I capture from Google shows dividend yield 3.74%.
Can someone explain this figure?

Thank you

 

Think of it like pizza, CDM is cut up into smaller slices, VAS comes in larger slices. $5k of each will feed you just as well at any point in time (they are made from different ingredients which age differently).

Just realised this has already been answered, in the same way

 

Yes and no, technically there is no direct correlation. The market gives it a correlation, NTA will be higher than SP if the market believes the manager is doing poorly and SP higher than NTA is the market believes the manager is adding value. The market isn't going to pay $1 for 50 cents of assets.

FYI, STA is generally called NTA.

Dividend (per share) divided by Share price = (spot) yield

 

Don’t you need to withdraw a minimum of 4% in pension phase? how would it work? Thank you

 

Correct me if I am wrong, in this case dividend is $0.16/$8.29 x 100%= 1.93%, whereas the above pic shows 3.74%.

What is the discrepancy?

 

Generally, there are two dividends per year (most company's financial year is a calendar one by the way) so you are probably not including the one (15c) paid on 10 March 2017 to obtain the yield.

 

Use the end of financial year as it's easier as otherwise you need to take account of the number of days left in the FY.

Value on 30 June is $800,000. Age of member at that date is 60. Required minimum account-based pension is 4% of value of fund, so pension is $800,000 x 4% = $32,000.

That's roughly how it works. No need to sell assets to convert SMSF from accumulation to pension phase merely some paperwork which can be tedious but the pain is over quickly.

I'm referring only in regards to shares and no loans within the SMSF. Real property in the SMSF is likely to be a whole new ballgame and one I don't have to know about.

And if you're between 55 and 60, I believe the fund is still taxed at 15% on earnings and concessional contributions made but you get some of that as a rebate in your person tax return. I haven't been in that situation for ages so my knowledge could well be out of date.

 

Spot on @SatayKing .
I missed that snapshot

 

@SatayKing did a great job answering your question.

To add further that’s why SMSFs typically keep a minimum of 1 - 2 years cash buffer to meet minimum pension requirement. Conservative types will hold a greater cash buffer. I withdraw our pension quarterly but with a SMSF it can be whenever you feel like it but the less often the easier from an admin perspective. If your dividends / distributions alone are enough to meet the minimum pension requirement then these will continually replenish the cash buffer.

Simple as that.

 

And frigging airlines which delay. Shouldn't be too hash. Sydney heat was causing some issues.

 

Thank you @SatayKing and @Nodrog! This is one great important benefit of SMSF. I wonder if for say industry fund where we can also choose the cash as a % of the fund balance and nominate the pension from that cash balance? although i think with SMSF, it is more flexible.

 

In an ideal world the share price would track the NTA (Net Tangible Asset).

 

Short answer is probably Nup. Only a guess.

Best check with your fund if you have one.

 

Transparency of dividends is an issue. With a SMSF you have the flow of dividends into cash, with industry you would sell units in the shares to replenish your cash. Not same, same unfortunately.

 

Due to CIPR (look it up) the Retail / Industry Funds are being encouraged (forced?) to develop better retirement products.

For example Catholic Super has introduced a Bucket Solution which in some way bears similarities with how some SMSFs work:

 

I just checked Unisuper which is an industry super fund where one can choose to have thr order of the investment options which pension payments are drawn from, ie.

1. Cash
2. Conservative Balanced
3. Balanced etc..

Still not as flexible and not sure if the returns can be put to the cash option or not. Will need to check the details.

Very informative @Nodrog ! thank you, you are so knowledgeable!