Just went 95% cash in Super - Share Market Correction

Bit late Sash on the all cash part.
I have been on conservative funds since March 2018. After the first jitters correction on the stock market.
Better late than never I say.

 

All ords was ~5900 March right now ~5800

What income have you earned on your cash?

 

Life is all bout no regrets...viva like difference...in your case Nodoggies.......you have plenty in cash and even a 30% market down turn is not going to affect you.

I for one...don't want to lose 30% on my 500k..... I am only a mere minnow here.....

 

Not sure why there is such an emotional response and what Sydney property has to do with it.

Just wait - is this related to your 2014 call to sell all Sydney property because of an impending crash ? OK, I get the connection - you look a good chance of being right on that one.

I'd see 95% cash as an extreme position but it could well work out well - if you get back in at the right time. That is all I was noting and that I'm taking a different position.

Just saw the size of the fund - agree you should take a consevative approach.

 

Conservative fund is about 5-6% from the few clicks I was researching at the time.
I didn't go cash as it was only 2-3% which wasn't idea for me.

 

Just correcting the facts that's all.

The other fact is I called a correction in Sydney not a crash..in very early 2016. I said 2019 was the year that it would be felt in Sydney. Lots of people got very upset. You are right it does seem to be coming to fruition...Sydney is down about 10%....another 8% ext year and perhaps 3% the following year...would bring if down about 18-20%. Again ...to keep it perspective......a property worth 500k in 2012 would have jumped to 925k....it then coming down to about 750k...is just normal...a correction not a crash...I never indicated a crash....maybe in OTP and heavy investor market...but not in normal suburbs. But anyone who bought from mid 2016 probably would not turn a profit.

95% cash..maybe extreme...but that's okay...but these times aren't normal.

On the positive Brisbane and Adelaide are moving well.

 

Our SMSF Balance is:

1. Down 6.3% since end of September
2. Down 5.6% this FY
3. Down 1.8% this calendar year

What am I doing about it - NOTHING.

We have 3 years pension payments in cash plus dividends, interest earned, etc keep pouring in.

Wake me up in 5+ years when MAYBE we run out of cash (although I very much doubt it).

In the meantime, I will enjoy the good life, some call retirement .

 

Can’t say I ever check our SMSF balance / performance to see if it’s up / down / sideways / disappeared etc. Each year I get around a 50 page report from the SMSF administrator which barely gets looked out and filed electronically very promptly. I do check the tax return though. It’s an income source as is the assets outside Super. And that’s the beauty of the focus on income, couldn’t give a stuff what the capital value of the portfolio is doing.

So yes what to do about it, NOTHING! Although if I notice panic in the market (blind Freddy couldn’t miss it unless stranded on a deserted island) it’s a signal to check excess cash reserves to take advantage of it.

Contrary to popular belief the sharemarket is not a casiono if you take a longer term approach and diversify widely. Inaction other than regular investing over time when cash is available combined with wide diversification and low fees is the weapon of choice in enabling the know-nothing investor to outperform the vast majority of professionals.

 

All I know is the cash balances for the SMSF and personally. For sure I check the relevant tax returns as I'm responsible for those. Apart from electronically filing the stuff and ensuring I meet legislated account-based pension requirements absolutely zilch.

A friend of mine who is in an industry fund and retired was checking the fund frequently. I once asked them Why? Are you going to change something? The answer was No, I wouldn't know what to do. My response was So why bother checking? So they stopped and from what I gather couldn't be happier.

Amazing how some declare their super is 'set and forget' and then fiddle or as @Rolf Latham once said 'meddle.'

Maybe all internet access to super should be restricted to disallow "meddle." Would be interesting to see the outcome. Won't happen though because "It's your super" the Government and funds would have us believe.

People are odd - and I'm odder than most.

 

Yes I should’ve have mentioned that also thanks. Cash holdings definitely do get monitored inside and outside Super. Having enough to meet X number of years mandatory Super pension payments and upcoming living expenses for a period of time is all that matters. We’ve always lived within our means so when less cash comes in we adjust our lifestyle accordingly and ensure there is always some additional cash set aside in case of troubled times. But as for what our shares / SMSF performance / value is at a point in time is meaningless to us so why bother checking and potentially causing ourselves stress over it!

Which makes one think how much better most peoples lives would be if they could just manage these two things as often mentioned by Thornhill - SPEND LESS THAN YOU EARN, BORROW LESS THAN YOU CAN AFFORD. Or in our case we’re now thankful that we’re in a position where we never have to borrow anything.

 

The idea of focusing on income and not on price is counter-intuitive for many people. Last year my young nephew and I had a lengthy discussion about using LICs in a dividend approach when he said he wanted to retire early (he’s only starting his first job ). I made this analogy to help him grasp the concept:

The importance of counting your chickens and not their $ value

Say you need 10 eggs everyday to feed yourself in retirement and one chicken lays 1 egg per day. Therefore to be able to retire you’ll need to own 10 chickens, but because you’re a cautious lad you’ll aim for 15, just in case.

Your plan will be the simplest one you can imagine: just go and buy chickens on a regular basis, one by one as your savings allow and keep them till you get all 15 of them. Every time you buy one more chicken, that’s one more egg added to your table every day. Save up these eggs until you get enough to trade them for a free chicken and you’ll reach your goal faster.

Now make sure you count your assets in chickens and not in $. Why? By using chickens as your unit of measure, you’ll be guaranteed to never go backwards as you keep accumulating more and more of them. Your progress will be steady.

But if you count the $ and the price of chicken goes up and down like a yo-yo, your eyes will see losses and gains where they don’t exist. Your chickens and your eggs are still there having gone nowhere but you’ll convince yourself that you need to do something urgent to keep them. That’s when you’re at the highest risk of losing them.

The only time when you need to consider selling is if you’ve got a seriously sick chicken. Admit your loss and move on.

The only time when you need to look at the price of chicken is when you’re about to buy one. Pounce when it’s on sale and buy cautiously when it’s fully priced, always with your end goal in mind.

Disclaimer: not advice. There are many possible strategies and this is one that works best for me. It's based on LICs.

 

I'm not familiar with those LIC's. Probably one of the newer fly-by-night lot.

 

Oh yes, they’re going to go up at Christmas, aren’t they?

 

Great post, thank you @truong

 

And importantly ensure your chickens are protected from predators of which there are many in the world of investing such as high fee gouging fund Mgrs and those offering a promise of a path to quick riches:



Unfortunately it appears we’ve failed as we have only managed to accumulate 3 chicken:

 

I smell a SCAM, 6 different chickens all up!

On a side note, i really like the look of the fancy black and white chicken.

 

The top three aren’t ours, just a pic off the net.

Our three chickens are large heritage breeds so the eggs are much larger. Hence we need less chickens. Their names are AFIC, ARGO and MILTON.

 

Shell companies