SMSF or Direct Investment Option ?

Thinking of moving away from existing super fund providers - myself on MLC ($200k) and my wife on AMP ($100k). Both funds have high fees and giving terrible returns (2%). Both of us are on highest tax bracket, age 40 , so atleast another 20-25 years of working life

Options i am considering are

1. Setup SMSF and then setup SMSF brokerage account with Stake for international shares and Selfwealth for Australian shares + Australia domiciled ETF like IVV and NDQ. PROS - complete freedom of investment options CONS - high cost. $2500 per annum- i have heard. Reporting and compliance overheads? Is it as difficult as i have read in forums?

2. Use low cost super fund like Hostplus or SunSuper and use investment option with high allocation to international shares. PROS - low cost. Set and forget. CONS - high growth ETF like NDQ not available . Any recommendations for low cost super with 100% international shares investment option?

3. Use low cost super fund + direct investment option to invest in IVV or VTS myself. PROS- more choice of investment CONS - high growth ETF like NDQ not available , unlike SMSF - cant invest directly in US bluechip stocks like apple. Access only to ASX.

Looking for thoughts from super experts who have experience in these options.

Thanks in advance.

 

ETFs including NDQ are available in Hostplus if you join ChoicePlus

 

Set up SMSF, set up stake account especially if you re in highest tax bracket as you can add 50k a year that is 100, extra in 9 months, and 150k in 21 months with some growth you should soon have over 400k, 2.5k is a pittance about 0.6 % of that, less after tax. The low cost funds could cost you a lot more if they continue with poor performance. You can DCA with stake buying one share at a time to so that you always have a buffer of good gains. Fund managers will just buy a chunk to spend funds, and follow their mandate and to get short term performance. Many wont even invest their own money in their own fund.

 

All this is a matter requiring licensed investment advice. You cant ask the people on the bus going to work what they think and expect comprehensive advice.

- $2500 could be a minimum for what you are seeking to do. The broker data form self wealth could be a data feed but not Stake.
- Lack of diversification
- Understanding of and risk management of currency risks (Intl shares + VTS / IVV / NDQ are USD denominated)
- Life insurance loss ? And cost ?
What is a high growth ETF if the market falls?

Its seems a big "all in" to jump from passive high fee options to go so direct. The risk of loss is highly enhanced. Your 1, 2 and 3 dont even address risk.

 

For an SMSF just buying equities and term deposits, the costs are more like half that.

Before you go the SMSF route, you'll need lots of research and some good advice that considers your circumstances in full.

 

If you understand Technical Analysis and confident enough to know you can do better than the fund managers of your super earning 2% per year, going SMSF to have more freedom of choice in terms of where to put your money would make better sense.

 

This isnt correct and is a generalisation.

 

Yep agree, it's actually pretty tough to do better than most fund managers. For most people the effort will not be worth the result!

With dedication and enough ability it may be possible for the right individual, but achieving this will require many hours per week of personal labor, and that kinda defeats the whole purpose of retirement as it's no longer really a passive income vehicle and you are tying yourself back to a 'job'.

SMSF is all about acquiring the leverage to enhance long term results and opening up a few more strategies and choices. Other consideration is the asset allocation in Super should maintain some form of diversification, it's not good to just let all the capital get soaked up in one asset. It is undoubtedly a more expensive and more complicated proposition that regular Super so you need to be prepared for some extra responsibilities.

There are also a couple of ways to get leverage inside regular retail/wholesale Super platforms but you need access to specific instruments. High quality wholesale Super platform with good wide menu choices, access to leading SMA's, direct stocks, ETF's, LIC's, managed funds, etc gives the ability to construct an easy to maintain portfolio suited to personal risk tolerance and desired outcomes. There are some skilled managers out there consistently significantly outperforming benchmarks over rolling 10+ year periods. In a low growth environment as is expected going forward, the case for seeking out skilled stock pickers and money managers grows.

No advice.

 

I love how you chopped off what I said exactly to fit the narrative.

If you are suggesting that educating one's self to learn how to handle and invest their own money is not worth the result! I respectfully disagree. I think its worth it to be financially educated. Matter of fact its an individual's sovereign right.

Partially Agree, if it was easy then everyone can do it, who's to say one can't and the other can without trying?

OP @mkbonline you owe it to yourself to learn and decide what can and you cant do with your own hard earn money.

 

I did a futures market and options license trading course way back when I worked for a major bank in the financial markets dealing room. The accepted rule I have heard repeated many time since is 80% of punters will lose money. Its why banks and investment bodies dont allow speculative investment choices by their traders and dealers. They dont want staff to speculate using client money. They want a diligent investment approach. I often see people who pay to do costly courses in trading who then deliver losses - It gives no certainty. Some are scams too. Those stock picker sofware ads on morning TV should be a warning. NOBODY with a proven "system" will share it if it works. It would be like me selling the geese that lay golden eggs. They are selling you a dream to make money from the fees.

Super has tough rules to limit leverage and "punting". I have seen some terrible smsf outcomes and some terrific ones.

One fundamental is that super is your money ...but not yet !! The laws are there to safeguard a future benefit.