Super for Lazy People - how to grow it if you don't want to SMSF

Thanks for the clarification @Terry_w.

 

OK finally sorted super.via Host Plus Choice Access fund....well almost..waiting on some cash to be put into Diversifed Fixed Interest

So in the end :
14% Fixed Interest/Cash - Index Balanced Fund and Diversified Fixed Interest Fund
43% International Shares - iShares s&P Global 100 ETF, Vanguard MSCI Index Internations ETF, Index Balanced Fund
43% Australian Shares - Vanguard Australian Shares (VAS) ETF and Argo, Australian Foundation Investment LICs

 

No comment on allocation of course as that's your business but I do think you have provided a good example of a person deciding on what they want to do and doing it.

 

Please feel free to comment..I don't mind...,

As for fees...I only had 220k in the account (plan to move another 230k from employer)

Oh the fees are not bad (approximate below):
$78/yr admin
$180/yr for Choice Plus
ETF Costs (160 + $56 + 72) = $288
LIC costs ($54) = $54
Index Fund = $45

So total is about $699 or a total % cost of 0.32%....I am happy with that.

 

Can I ask, across your non-property portfolio what is a %return that is considered good in your investment book? I for one aim for at least 12%(net fees but before taxes) as a minimum. 18% is a good-year, anything above that is very good. To me the trick is to have consistency in performance year on year.

 

Wow 12% per annum is awesome...but I think it is not realistic....I was thinking that if I can get a 6-8% return that would be great.

Even in property 12-18% consistently per year is unrealistic. For example my 2 brm in Meadow bought for 90k in 1994 is now worth about 580k 2018. But if work out the compounded growth rate per annum is about 7.8%

Obviously you gear property thus why the gains are magnified....you can do it with shares also but risky but can be done if you use conservative rates of gearing.

 

You are right, consistent 12% to 18% is unrealistic. I took active interest in super and non-property investment only in the last couple of years and it's been comfortable so far. The speculation is that the lack of steam in property markets will get more people into equities so there could be a wave to ride, maybe ....

 

Would someone be able to share the pro's and con's of International vs Australian share allocations.. or point me to where i could find some more information.

 

@RayO You may be interested in Vanguard's index tracker.

Vanguard Index Volatility Charts

Ideally you'd own some of both assets for diversification.

Australian shares may come with tax credits of 30% international shares will not have this feature.

 

Asset allocation: Australian vs International

Australia is less than 5% of the world market, but I wouldn't advise Australians to have an allocation less than 20%. Dividends and franking credits are way too juicy and you don't need to be concerned with currency fluctuations. Conversely the argument is Australia is heavily weighted meaning it lacks diversification across sectors.

I'm 50/50 in super and have a higher Australian allocation outside super. Looking at historical performance may help you.

Not advice.

 

And when retired where will you be spending most of your retirement savings, think currency. Yes you can hedge but it’s not without it’s downside.

 

Took a look at VGS hedged I think it was, and the one year distribution was something like 23%.

I’d rather take the unhedged and accept the currency fluctuations.

 

More importantly check out the distribution history of Vanguard International Unhedged Vs Hedged for the same periods. Hedging can cause havoc with reliability of income distributions:

UNHEDGED:


HEDGED:

 

Just curious on Australian allocation. Any rationale behind choosing a combo of ETF & LICs? Why not just LICs?

I'm in the process of sorting my super though the current amount is just $50K. Plan is to go for LICs & VGS.

 

Just diversification and different styles of investing...

 

Okay...took a while but here is what my 220.5K (as of 17 feb 2018) is distributed

Argo LIC 7.06%
Australian Foundation Inv Co LIC 6.73%
Cash 0.29%
Diversified Fixed Interest Fund 15.46%
Index Balanced Fund (Hostplus) 15.59%
iShares Global 100 ETF 18.31%
Vanguard Australian Shares (VAS) ETF 18.26%
Vanguard MSCI International Shares ETF 18.3%

Next stop to move more funds from my employer fund to my Hostplus SMSF Lite Fund

I will continue to monitor over the next few months...I might have to move more to Cash and Fixed interest if the market gets too volatile.

Comments on my portfolio are most welcome @oracle @SatayKing @Nodrog @truong .... ...I know no adice...

 

Ok no one has responded. So I’ll offer some thoughts assuming this is all in Super. Although you’ll probably wish I hadn’t responded.

Firstly a look at Hostplus Indexed Balanced Fund (IBF):


Now back to your portfolio selections.

Ishares global 100 and Vanguard International are not all that different. Ishares Global 100 stocks are roughly the top 100 in Vanguards Int Fund which dominate capitalisation wise. Likely to be the same as what’s in IBF International.

ARG / AFI / VAS all similar. VAS is just duplicating Australian Shares in IBF.

Diversified Fixed Interest Fund unlikely to be offering any value over fixed interest in IBF.

It appears overall you’re mostly duplicating what’s already in the IBF. If Core / Satellite was the aim then better to use IBF as the substantial Core then add Satellite funds that are very different to what’s in the Core.

Given you seem to be taking an asset allocation approach rather than investing for the natural income from the assets then the IBF is probably all that was needed. If it was felt that 35% Australian Shares was on the low side then ARG / AFI can be added to increase exposure.

As for moving more to Fixed Interest and cash well there’s 25% in the IBF. The rebalancing is already being done there. And it introduces a timing element. How confident are you in timing the market? And Cash is as good a place as any to build dry powder if volatility is a concern.

What you’re doing is different to how I invest so perhaps ignore everything I’ve just said. And besides it doesn’t matter what any of us think as long as you’re happy with the portfolio that’s all that matters.

Gee I sound negative tonight. It’s been a tough day in the yard.

Not advice as usual.

 

Yep...guilty....I had to put 20% in IBF....80% in choice plus...but if there is more volatility...I will move more to Fixed Interest/Cash

 

Hay Sash, Sounds like you are going to monitoring on a reasonably active basis for the short term?
Is the longer term goal to be able to take your eyes off this and accept the 6 monthly returns? Just curious as I will be doing something similar in the next few years.

 

Yes in the short term i will monito

But tou are correct in the longer term it is set and forget