Super happiness

I worked part time for six months last year, when I went back full time I salary sacrificed that half of my pay I wasn’t getting, into super. Then I transferred to a shift work job and salary sacrificed more. I’ll never have enough to be able to live on it so am trying to have enough to pay the mortgage off in a lump sum. It’s grown at an amazing rate.

 

My super went sideways for a while but it hit a new milestone today
Yippee!

 

Hi @Gockie , I see this is somewhat an old post. Wondering if you would be able to point me the reason for your “thanks”. Having some free time so catching up on things.

 

Totally agree.
Early in my career I automated/programmed all those fees into managed funds retail sector.
Once we set up our SMSF, around 24 years ago, rolled over the funds, we too took total control.
The thinking was we don't want a company like ENRON in US, taking our hard earned money in OZ. So at least if we lost, we would be totally responsible for our investment decisions.
We are still in accumulation phase, spouse could access very soon I need to wait a bit longer being somewhat years younger....but still in business.
I never did the actual calculations until now from starting point but this thread made me do it, it includes CC (Concessional Contributions) no NCC (Non-Concessional Contributions) through those years (they did vary as the governments varied them), earnings, etc.... so all contributions preserved (taxable).
This reminds me how I consulted a SMSF strategist to set-up Reserves, and she was so surprised all is preserved, I had to explain it was all created or made and invested in SMSF (other than CC).

So I needed to go and ask my two adult kids, to confirm whether the % is correct, how to calculate the %, and they told me it comes to 9421%, that's correct that's the percentage. It took around 24 years so yearly % would be 392.54% (in simple interest + CC).
However, I was told once by my good friend (treasurer of a bank) that I am an exception to the most 99.99% of how they invest in Super. Not to boast, but it actually makes me think, how fortunate we have been.
Now, I usually give up don't explain, most don't believe, and most would not do what we did.....took huge risks!
My age and ignorance of thought then '...at least I will be responsible for my investment losses or gains and I have around 30 years till I can access Super....' served us well!
Invested into direct shares, then private IPOs and when they floated and increased we sold (some 30 times in value), invested into direct IPs, invested into shares then when on top sold out of all prior to GFC, then invested some into direct gold/silver then sold, then again invested into private IPO which then converted to private US shares (so we are accidental US stocks holders - great for diversification), bought more IPs, then bought more IPs with LRBAs arrangements.
So there are exceptions like us, who took really DIRECT control.
I too realise this is not for everyone...!
As my mentor Jim Rohn said we applied these principles:
- If you are not willing to risk the unusual, you will have to settle for the ordinary.
- Finding is reserved for those that search.
- Get around people who have something of value to share with you. Their impact will continue to have a significant effect on your life long they have departed.
- Formal education will make you a living; self-education will make you a fortune.

 

Before talking to them I had no interest in Shares, but after chatting with @trinity I came away with the thought you are better off buying shares (using your home loan) rather than putting money into offset! Reason being, shares give you a return (which can actually be higher than your home loan interest rate), plus they tend to grow over time.

So with that, I ended up going to a Peter Thornhill day thanks to @wombat. Looking at his charts, I came away with the thought that shares over the long term give something like a 14% return. Of course, shares are not 100% reliable and in the short term, it can move down, up, sideways, and maybe the last 30 years have been good for shareholders. But it's a very large return.

@wombat told me about the ING Living Super product and I've had my super in there ever since then. (Note: they changed their fee structure since I opened the account, so maybe right now there's a better product than this for anybody looking to switch). What I like is that I can buy shares as I like and I have this control without having to have an SMSF.

 

And paying CGT also

 

CGT in super isnt a major cost. Its a max of 10% of the profit. You get to reinvest 90% For some funds its 0%

 

You have just over 94x your balance after 24 years?
That is just under 21% growth p.a. compounding without any additional contributions FYI. So your annual returns are less than 21%.
Depending on what you put in contributions it sounds like you have still had excellent returns, well done.

I've point this out to (hopefully) show how time and solid returns result in large gains.

 

Thank you for the compounding calculations as I did not know how to do it...
To be honest it is very hard to calculate as it is a snapshot in time at a given day and on perceived values including currency exchange.
For example I did the calculation yesterday based on previous US Nasdaq share value of one share but noticed after a day, today it closed at 29.6% higher (based on US $, quite volatile since the takeover announcement - it ranged from $2 to $25 then down now....to somewhat).
Similar with IPs valuations they are estimates so these are also paper gains, or unrealised gains.
Also the 94X balance is 'net worth' however there's leverage of more X for the LRBAs.
You see our SMSF was generating over 6 figures in income for quite few years now so lots of tax and land tax to pay too even at 15% tax, so we restructured, we decided we better use some leveraging since we could not access it as yet and to minimize land tax (each Bare Trust has new threshold limit in QLD). The actual LVR for SMSF is 20% so quite low too.
I wonder @Hodor, do any of you share experts own direct shares abroad (e.g. such as in US?), or is this too risky for most?
What is wonderful though that this is just in Super, we assumed this would be something 'little' extra as we do own investments outside too.

 

It sounds like you are doing something right

Sensible leverage, favourable tax treatment and taking a long term view along with a little luck can add up to great results.

I don't have any direct international holdings and haven't been adding domestic direct either. It takes a lot of time and effort to make educated decisions on what to purchase and that still isn't a guarantee of out-performance. Unfortunately I am not very creative and unable to draw on multiple information/data sources to make good decisions that give me an edge, following a proven simple formula I can do easily, maybe I am a victim of conforming to the education system. Luckily I still have a reasonable time frame so just accepting market returns will likely result in us obtaining a wonderful position in time. Sometimes I still entertain the idea of allocating a small portion of the portfolio to direct holdings which I would be happy to do if I can prove to myself I will do the work.

Others on this forum seem to have found niches and ways of thinking that have given them an edge.

 

Discounted gains in accumulation are 10% and non-discounted are 15%, with long compounding flight paths the future value of theses expenses are substantial over the long run.

In fact, the problem with pooled superannuation funds themselves is how they allocate to members, earnings generated from capital allocated to deferred tax liabilities. Passive members potentially subsidise the tax incurred by active members.

To me it seems our whole financial industry and 'most' of the advisors working in it just seems so dumb and/or vested, it makes me shake my head in disbelief sometimes. So much noise and movement – so little economic value added for all the costs incurred.

 

Yes and no (as I'm an outsider). For those in the bog standard options (conservative, my super/default position, high growth), there's one set of fees. If you select the quasi-smsf options (where you can select LICs, ASX200 etc), the fees are charged accordingly but I haven't read the PDS as to whether individual trades etc are passed on or the costs pooled and spread across all members of that stream).

I do wonder about the logic behind a fund manager then selecting another bunch of managed funds as investment options, that's definitely adding little value in the absence of advice.

 

It's been going up. Jumped up another 15k within a couple of days.
There's a lot of NDQ, fair amount of CBA, some CSL and COH.... etc.

Oh, VAS too

 

Give it time. Still eleven business days to go.

Such short-termism is rife it appears.

 

SUPER COMPOUNDING!​

I didn’t really want to publicise what’s in my super to the wide world, but I figured, I would do it to illustrate this point. Anyway, it’s good for me to have record of how the numbers change over time.

1994 - June 2017 my super went from $0 to ~$200k. Note, I started working full time in 2003, before that, it was all casual or part time. So, this period where I got to $200k of super took me 9 years casual/part time plus 13.5 years full time employment.

June 2017 - June 2020 (3 years) my super went from ~$200k to $320k (approx)
Reading back through this thread, it was 250k at Jul 2018, and it was 295k in Jul 2019. So went up 45k in that year.

Financial year 19-20 was pretty crap, my super only went up about 25k… basically the value of the contributions. . Yep, Covid shock to the stock market April 2020.
June 2020 - June 2021 super went from $320k to $420k. Yes,… $100k in 12 months.

Anyway, love compounding… and I salary sacrifice.

It’s crazy to think it’s possible the latest 1 year of growth in super is pretty much worth 1/3rd of what I managed to accumulate in the previous 17+ years of contributions.

Of course, it could drop again, but it’s great to see it all moving, and seemingly at such a rapid pace.
Covid has done well for me it seems.

Oh, and I now have about 100k of NDQ.

 

Likewise, I'm expecting to see >20% return for 20/21 after meagre returns in 19/20 due to the C-19 correction.

 

Oh Gockie, I am so glad you mentioned this, I am currently too befuddled to break down the figures but I clearly recall the penny dropping when I went to my super fund free seminar thing and realised that my "rate" would be much better topping up super rather than tipping it in the mortgage. I salary sacrifice everything I can and thought wistfully if I could amass enough in super to pay off my (pretty big) mortgage this would be success beyond my wildest dreams.
I surpassed that some months ago and it continues to grow and grow, more than the figure though, are the options it provides to me and the peace of mind. I'm pretty sure I will never be self funded but, combined with my ingrained frugality, I am anticipating a brilliant life after paid work, and, if I chose, I could start it now!

 

Love it!!

 

Thanks for sharing @Gockie.
I’m in my 30s.. so still a long way to go, but I started paying attention to super 3 years ago and since then have contributed the maximum $25k. I saw the real magic in the compounding once I had over $100k.
I don’t tinker with my super too much, except that at the moment, I have set it to the high growth option. But a reflection for me is that if you have shares outside of super, get to $100k as quick as you, and then start regular contributions to really maximise the compounding. A really good way to emulate your superfund.. but without the age restrictions to access.

 

This chart below is a good illustration of the compounding. And you are completely right, it’s the beginning that’s the slowest. From How much super is enough?

For your super balance to go from 0 to 200k takes about 20 years. (Age 20 to 40).
But to go from 200k to 400k takes 7 years. (Age 40 to 47)
The income from the investments really ramp up, (orange line), so while the contribution rate mightn’t change, the super balance starts to accelerate.
Then the next 200k takes roughly 4-5 years (age 47 to 51/52) and the next, just about 3 years.
Of course, there can be world events that shake things up, but this is the general pattern.