Is Super really that Super?

Discussion in 'Investment Strategy' started by tk421, 2nd Feb, 2022.

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  1. thunderstrike888

    thunderstrike888 Well-Known Member

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    I'm not a fan of super at all.

    I'm young (mid 30s), I dont contribute a single cent additional to super and if I could I would withdraw each and every single cent of it.

    I dont want my money held up for another 35+ years for me without me being able to touch it. I personally feel super is for ppl that dont know how to invest their own money properly and its just a safeguard for the majority of ppl who are hopeless with their cash. If I could access my super right now I'd be able to double/triple my money easily myself rather than give it to some fund and let them invest it for me.

    In fact I dont think I know a single under 40 that actively contributes to their super except the bare minimum required. None of my work colleagues, none of my university cohorts and not a single person actually.

    Also who knows what the government will go by the time I reach 70 or so years old. Thats another 40 years almost and they may raise the super age more and more as we live longer and longer. No thanks give me my money now.
     
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  2. sash

    sash Well-Known Member

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    Yep are absolutely doing the right thing..I wish I sacrificed a lot more into Super. I have a lot in property...issue is that it is very hard to get super up quickly to max it out once in your 50s...much easier from later 30s/early 40s.

    The pay whilst 20-30 years away is that it will pretty much protect you and insulate you not only from life (bankruptcy) but also pay you an tax free income stream. A good way to keep things on track by just sacrificing a little more..the limit is 27.5k per annum now. If you are on 100k employer put in 10k now...putting just 5k pre-tax will save you 750 tax but also cost only about $65pw or $280 per month...this is dollar cost averaging over 20..30...40 years.
     
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  3. Ruby Tuesday

    Ruby Tuesday Well-Known Member

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    Yeh. the funny thing is you dont have to sacrifice anything. Just pull out some equity stick it in super get maybe 1k ( 300%) return on your $300 interest for every 10k you put in, while getting maybe another 3 or 4 k tax refund which you can than invest to ultimately fund future contributions. You only have to put a pitance in if you start early to reach limit. The difference between 30 years of compounding and 27 years is amazing.
     
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  4. sash

    sash Well-Known Member

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    That is exactly right...earlier the better..I started in late 40s...but if I started late thirties it would have been 100s of thousands more. Compounding the eighth wonder of the world.:)
     
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  5. tk421

    tk421 Well-Known Member

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    not trying to convert you but as others say it does eventually balloon, it is just a bit slow at first.. I started contributing 100 a week in late twenties then it just went exponential as i was putting more and more in.. I will probably withdraw it into SMSF soon, when i get more time that is, and see what i can do from there.. plus you can withdraw it at 60 (dont quote me on that) ... I'm more concerned that the govt will not give any old folks pensions by the time i retire ,, you never know of course so it pays to have a plan b which i think i think do, the fx stuff.. glad others can confirm though, thanks, i haven't completely gone off the rails yet!
     
  6. SatayKing

    SatayKing Well-Known Member

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    I believe the $1.6m is now $1.7m due to indexation.

    Also, I'm pretty certain a person who has reached preservation age may draw down from the accumulated component and those funds are not subject to personal tax in their hands.

    Meant to add if you did have $1.7M and it grew by 20% last FY it would now be $2.05M and the minimum pension drawdown @4% would be $82k or $41k if the person applied the present 2% concession the Government has allowed for this year.
     
    Last edited: 3rd Feb, 2022
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  7. inertia

    inertia Well-Known Member

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    yes, BUT, could someone who had super in the 90s have directed that into property? Would anyone have had a $2m super balance in the 90s? If someone in the 90s had a potential to invest that amount of money, would they have bothered with super?
    I'm curious about the realities of what the actual max could be, and what realistically it would be...
     
  8. SatayKing

    SatayKing Well-Known Member

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    I don't know about the actual numbers but there were two things. The concessional contributions then was $100k per annum per member and non-concessional of $180k per annum per member.

    And for many, the gift from the God's when the Howard Government allowed $1m contribution per member in 2007. About $20 billion went in to super in that year.

    Oh what joyous times they were!
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Yes, plenty set up SMSF & parked the proceeds from a business or CGT exempt downsizer house sale into their super as there were few if any caps on contributions.
     
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  10. MB18

    MB18 Well-Known Member

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    The problem is that everyother person thinks that if they could withdraw thier funds they could double/triple thier money, until they dont and then become a drain on the pension system.

    Besides, you do have the ability to make investment choices yourself within super, be it via a fund or smsf.

    I have been contributing since my early 30s because 1) unless I die I'm going to retire and get the money anyway 2) I'm in the highest marginal tax bracket so there are tax advantages to be had 3) The rules will change over time and these will be regarded as 'the good ol days' - as @SatayKing eludes to above.
     
  11. Marg4000

    Marg4000 Well-Known Member

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    You have to put these figures in context.

    Universal super was not available for many people until leglislated in 1992. Prior to that it was only offered by big companies or generous government schemes. In recognition of that, there were very generous contribution limits in the 1990s (for those who had the money).

    I was not eligible to contribute to super until I was in my 40s.
     
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  12. SatayKing

    SatayKing Well-Known Member

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    While I do apreciate your point, those limits were not put in place specificaly for that purpose. As you say anyone be they in their mid-20's or mid-50's who had the necessary level of funds could contribute those amounts.
     
  13. kierank

    kierank Well-Known Member

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    We are 11+ years retired and in the same boat. Life is good.
    I reckon we will be there by the time we are 90 when the mandatory pension rate hits 11% :D
     
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  14. Frenchie

    Frenchie Well-Known Member

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    I like super. I appreciate many people think they're smarter and would invest their money better outside of super - I actually doubt they are that smart. But I like low effort long term investing, and I will be very happy to get a $50-$80k return tax-free in pension mode to complete my passive income.
     
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  15. thunderstrike888

    thunderstrike888 Well-Known Member

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    This is what super is for. Ppl like you.

    Dunno how old you are but if your under 40 currently - I would not be surprised within the next 20-30 years there are changes to super and ages in which you can actually access it.

    You probably will be dead by the time you can access super soon. I know several ppl my old mans friends that have died already before they got to see even 1 cent of it.
     
  16. Scott No Mates

    Scott No Mates Well-Known Member

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    Unlikely - the date for access of super is only 60 yrs as opposed to the pension age which is rising due to life expectancy. Super is your money/employees have contributed the money in the fund, the pension is the government's responsibility and they have the right to change when you become eligible for a government payment.

    Even the raising of the pension age allowed a 10 year transition.

    Withdrawing your super and paying tax
     
    Last edited: 4th Feb, 2022
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  17. Indifference

    Indifference Well-Known Member

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    There is certainly a lot of misunderstanding with super.

    As an asset vehicle, super is very tax effective compared to other assets, although access is more constrained which shouldn't ne an issue in a diversified investment portfolio.

    Fears or rather, misunderstanding from younger investors is in many cases due to a lack of knowledge & experience..... advocating a single investment vehicle as a one size fits all is fundamentally flawed and rather niave. Sure, you can, but if you take the time to understand the financial affairs of high net worth individuals you will see they maximise the benefits of all asset vehicles including super

    Some seem quick to dismiss super & I'll admit to having doubts in my 30s..... but have gained a better understanding now.
     
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  18. sash

    sash Well-Known Member

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    Yep...people don't understand the implications.

    This is the issue with a lot of younger set...they seem to want instant gratification. I reckon the govt will start taking their cake of property investors soon....slowly but surely. Qld govt in the lead. ;)
     
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  19. kierank

    kierank Well-Known Member

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    Can you elaborate on this?

    I started drawing my Super pension when I hit 55.
     
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  20. The Falcon

    The Falcon Well-Known Member

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    Super is a structure along with company and trust that has real value for tax planning purposes. Dismissing it out of hand “because I can’t touch the money for 30 years etc” is shortsighted imho.
     
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