Low cost DIY SMSF for an ETF portfolio

That’s power of fintech for you ! We need more of them to shake the industry!

 

IDK it remains to be seen whether throwing it all on black "all in" will be a good or poor investment choice. In time a correction is inevitable. When you dont see a 40% crash coming you wont also see the 67% recovery then needed just to break even. Its why the GFC ASX recovery took 10 years. Then Trump came along and everyone ..forgot. At present there seems a chorus of people who dont remember what a "crash" is. There is a cohort of investors who assume Vanguard etc wont also fall. These cheap and easy "admin platforms" that flog leverage and FX risks and bypass the prudential safeguards of the super system by selling punters a smsf so its 100% "all in" are a concern.

The fact that ASX trades arent directly possible is a worry. And you are bound to their platform. In the maantime how many will itch to buy US shares. Its like they buit a casino and opended the doors with just the high risk games available.

eg In the US market, there is a large range of inverse ETFs that allow you to bet against the direction of a market (if you think it's going to fall) and generate returns from that.

 

Interesting about these downturns in the market.

I did an exercise on an indifferent investor who bought $2k of STW each month starting in January 2008. No sells. Just buys. It results in September this year holding 6,753 units in STW and receiving a total of $111.5k in distributions including the one to be paid this month. Doesn't include franking.

Total amount invested was $330k.

Didn't bother to work out result if DRP applied.

 

Crypto, meme stocks, thematic ETFs, zero cost brokerage. It will be interesting to see the result of the next crash.

Personally, our super has been “all in” on equities for the past 25 years and plan to be for at least 25 more regardless of being with UniSuper or SMSF.

 

How are you tracking with your set-up mate?

 

All ready to go, just waiting on the Stake launch of ASX trading. Supposed to be in early Oct.

 

Would be keen to hear how your mix of 20/47/33 VAS/VTS/VEU has performed past 25 years compared to S&P 500 (IVV) or NASDAQ 100 (NDQ) Benchmark.

I get the diversification theory and past returns does not guarantee future returns but practically speaking US market continues to outperforms all other markets (including top developing countries like China, India) and leads direction of other stock exchanges across the world ! Warren Barrett said - Never bet against America

 

Yet Berkshire Hathaway holds a 9.9% stake in Chinese electric automaker BYD purchased for HK$8 per share in 2008

Warren Buffett Has Made a Killing Off China's Biggest Electric Car Maker

 

You can use portfolio visualiser to compare US large caps to the rest of the world.
Backtest Portfolio Asset Class Allocation

Keep in mind, my portfolio is more like 20/80 Australian/Global Equities as the 47:33 will float with global cap weight. Specifically I use a google sheet which calculates 80% x "USA IMI" / "ACWI IMI" from =IMPORTDATA("https://www.hette.ma/marketcap/indices.csv") which updates monthly. All nicely automated removing behavioural risk. Think of it like VT which is not available on the ASX.

The portfolio is still roughly half US so will capture any continued performance there and Australia has been the highest returning market in the past 100 years beating even the US. Even so, I'm not willing to overweight more than 20% as my property investments are also tied up in the Australian market.

US has done really well the past decade, but these things tend to revert to the mean. Beware chasing past performance.
Why not just invest everything in the US market? — Passive Investing Australia

The S&P500 vs NASDAQ have performed about the same over the long term, however NASDAQ has a much higher volatility.
S&P 500 vs. Nasdaq 100: Which Index is Better? - Four Pillar Freedom

From current valuations, expected returns from the US are lower going forward, but given no-one really knows what actual returns will be I've chosen to own the entire market with a tilt into other risk factors like size, value, profitability and momentum for a 20% portion of my portfolio outside of super keeping the super portfolio simpler for Mrs Hockey Monkey.

 

Stake ASX Beta was opened up to me today both for the SMSF and Individual accounts

Initiated a non concessional transfer to the SMSF today. Unfortunately my bank doesn't support Osko so will need to wait 24 hours.

Next will be a rollover from my existing super which I'll do in 5 separate requests to remain 80% invested at all times.

 

Funding arrived sooner than expected in less than 3 hours even without Osko.

First purchases of VAS, VEU and VTS completed without a hitch. Nice clean interface in Stake.

 

All the best in the transition - yes doing it in tranches to remain invested is the way. I did 4 tranches myself and it took over a month.

 

I'm hoping it's a little quicker now. As of Oct 1, funds have to complete the transfer within 3 days per request via SuperStream, although I've heard some are still dragging their heels.

 

So, your plan is to do DCA using the transfered super ? Instead of lump sum investment in index tracking funds

 

We are already 100% equities in the existing actively managed super, so not exactly DCA.

I will lump sum each transfer but do 20% of the total balance at a time to average out the market movements for the 1-2 days we are out of the market as part of the rollover

 

@Hockey Monkey have you found any constraints or issues (or outside the $770 pa beta fee) with administration of things such as
- allowable expenses through stakesmsf case account. Eg, payment of external life insurance
- release of funds from div293 assessment
- administration of contribution splitting requests

 

Nothing yet. As long at you don’t hold assets outside Stake, it all seems ok.

I don’t hold insurance but they did offer it. I pay div293 using income rather than super as my strategy is to shovel as much into super as possible, maxing out both the concessional and non concessional caps. Paying div 293 inside super is like a withdrawal.

Haven’t asked about contribution splitting. Wouldn’t expect an issue though.

 

I'd guess some things fall outside that and you need to go to the higher fee version.

Was KK in here to answer that question?

 

How do you pay Div293 from SMSF or retail super? I wasn’t aware that it’s possible!

 

The ATO sends you a letter giving you the choice or paying yourself or finding via super. If you choose the latter, the ATO then notifies the super fund to release the funds. I assume the same goes for SMSF’s and retail funds