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

I did not realise this. So maybe another good argument for growth assets in pension phase?

 

I would have thought income assets are better off in super pension phase. Since, you could make 6% gross by investing in LIC so $1.6m portfolio can earn income of $96K tax free. If you are a couple double the amount.

A high growth asset might provide 2% income and 6-7% CG. So 2% income on $1.6M you would make $32,000 tax free. Sure, your income would rise much faster due to higher capital growth. But it would take more than 15 years of 6%-7% growth in income for that $32K to rise to 96K. By that time you might be in your 70s and won't care about the $96K income that much.

Just thinking out loud...but happy to be proven wrong.

Cheers,
Oracle.

 

Being under 65 (58) my minimum pension requirement is 4%. I only take the minimum (also have assets outside SMSF) so any income above 4% (thank you refunded franking credits) gets to compound. Then of course there’s share price growth on top of that. Capital is not touched (at this stage).

 

2% + 7% = 9% = $128,000 pa, but if you only want $96000 you would liquidate 4% of your portfolio. It makes little difference whether liquidating dividends or liquidating growth to derive income, except it is along time between drinks with dividends often you will be waiting 6 months , and with growth shares each year you will need to liquidate a smaller % as you will have growing capital. I wouldn't consider 7% high growth.

 

Any way in a superfund isnt 4 or 5% pa either the max or min you can draw.

 

https://hostplus.com.au/-/media/Files/Hostplus/Documents/0966-Hostplus-ETF-listing-0217-FA.pdf?la=en

Actually it is there see this link......

 

1% is too high a fee for super IMO. In the long term it will have a significant impact on your final super amount. Compounding works both ways:

"Smart tip
A 1% difference in fees now could be up to a 20% difference in 30 years."

Super fees | ASIC's MoneySmart

Remember LIC and ETF MERs start around 0.1% and a number of decent super funds have fees in that vicinity.

Ask yourself whether you are getting value for your 1%.

Not advice.

 

@ErYan - thank you for your thoughts.

I am thinking to switch to the Australian Option...
https://qsuper.qld.gov.au/our-produ...versified-and-single-sector/australian-shares

I am also looking at their self invest option - but I think the fees here would be big too.....
https://qsuper.qld.gov.au/our-products/investment-options/self-invest/fees

And the only thing I would want to invest in with regards to their self-invest area would be VAS. Is it bad to put 100% of your super into VAS? I would choose LICs if I could - but they do not have LICs as an option.
https://qsuper.qld.gov.au/our-products/investment-options/self-invest/exchange-traded-funds

 

@sharon, probably telling you how to suck eggs but you may want to explore changing providers if the one you are presently with is not satisfactory to you. Plenty more out there.

Always an option.

 

I’m rusty on Rolling over to a new fund. But I’m assuming if you change your investment selection within Qsuper they will need to sell units (in Aspire) incurring CGT to transfer the proceeds to the Aust Shares Option? In which case it might be worth changing Super Funds as rolling over to the new Fund Would still only incurr the same overall cost.

But please DYOR as I may be wrong.

 

@SatayKing and @Nodrog thank you for your thoughts.
For some strange reason I don't want to move away from QSuper.

I have read that there are no fees for changing from one investment option to another in QSuper. I will call and confirm that though - and ask about CGT.

EDIT - to add that I just called QSuper and there is no fees or CGT when switches between options within QSuper.

 

No there won’t be any fees as CGT is not a fee. It’s tax.

 

One important benefit that QSuper does have is the Tranfer to Pension Account bonus. In an earlier post I commented on some Retail / Industry Funds trying to come up with ways to discourage members from leaving to setup SMSFs. SMSFs don’t pay CGT when commencing a pension unlike the others. However QSuper has implemented the following to try to compensate for this:

https://qsuper.qld.gov.au/our-products/superannuation/income-account/transfer-bonus

Maybe that’s why the fees are higher.

And this:

Some interesting structuring going on here.

 

As it stands, your ability to make NCCs is limited once you get to a balance of $1.4-1.6m (at any 30 June) ... seems to me that if you ever want to do NCCs and are likely to exceed the $1.6m (as indexed) you should make them sooner rather than later? Assuming of course that a 15% tax rate is attractive to you.

 

I also asked about CGT. Apparently there will be none. No fees or taxes for moving between options within QSuper (apparently that's all factored into the total fees). Of course - it could be that the lady I was talking to has no idea.

 

Yes. There’s no limit on what Accumulation Account can grow to, only on the NCC limit. So get the $1.6 Mil in there ASAP to get growth compounding sooner. But then keep making the $25K concessional contribution to 65 (or longer if meet work test).

Not advice.

 

Get it in writing she may have no idea?

I find it confusing with this mob.

Lifetime Aspire 1

Objective is CPI + 4.5%,

yet go to the Aspire 1 Dashboard right at the bottom of the page and

Return target (10 year return target for 2017-2027) CPI + 1.9% p.a.

10 Year return target: Represents an estimate of the mean (average) annualised percentage rate of net return of a representative member that exceeds the growth of inflation (measured by the Consumer Price Index (CPI)) over 10 years from 1 July 2017 – 30 June 2027.

Very easy for members to fully comprehend.

 

Another reason why I went down the route of SMSF. If you can't clearly understand and explain the fees and investment return figures there is a big problem and best to stay away from such products.

In the past I used industry super fund. I would use their published investment return figures to my balance but would always fall short of their published figures. Even though their published investment returns were after all expenses and fees. The fees on their statement used to have vague descriptions. I just got frustrated not understanding why and how these fees are being deducted from my super account. May be I am dumb . But decided to give up and go down SMSF route. I can now calculate exactly my investment returns and expenses. Everything is so simple to understand now

Cheers,
Oracle.