Superannuation: lowest-cost LIC/ETF implementation

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Zenith Chaos, 22nd Mar, 2017.

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  1. Zenith Chaos

    Zenith Chaos Well-Known Member

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    Proposed fee hikes in a "low-cost" superannuation fund (I No Good) have forced me to reconsider my super fund.

    My strategy:
    1. Invest in low-cost superannuation using a simple combination of LICs / ETFs [Accumulation phase?]
    2. When I reach 60 transfer money, avoiding any CGT event, into account from which I can get paid dividends [Pension phase?]
    3. Spend the dividends until I cark it

    Questions on SMSF:
    > Will SMSF be the lowest-cost (as a percentage of funds > 300k)?
    > Does purchasing a simple set of selected LICs/ETFs make SMSF cheaper?
    > Will I incur CGT upon pension phase?
    > Can the fees for SMSF change?
    > If I choose DIY SMSF how cheap can I make it?
    > Is this the appropriate thread for these questions?
    > Is there a book I can read?
     
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  2. Perthguy

    Perthguy Well-Known Member

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    A few years ago I opened a SMSF with eSuperFund. It was for an investment that didn't take off and was subsequently closed. I found the company very easy to deal with, to open and close the fund and the annual compliance paperwork.

    I guess this could be an option for you. There is an annual fixed fee of $799 per annum (GST inclusive). Most importantly for you:

    Invest in All ASX Listed Shares and Securities

    The ESUPERFUND Preferred Brokers (CommSec and EBROKING) allow your SMSF to invest in all ASX listed Shares and Securities including:

    • All ASX Listed Shares
    • ASX Listed Options
    • ASX Listed Warrants
    • Exchange Traded Funds (ETFs)
    • Exchange Traded Commodities (ETCs)
    • Listed Investment Companies (LICs)
    • Listed Trusts
    • Any other Securities Listed on the ASX

    https://www.esuperfund.com.au/trading/australian-shares/how-it-works

    There is heaps of investor education that will be useful whether or not you choose eSuperFund as your provider.

    https://www.esuperfund.com.au/learn/learning-modules/learning-modules
     
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  3. Hodor

    Hodor Well-Known Member

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    I looked at esuper briefly a while back.

    My question is if you are not happy could you move to admin of the Super fund somewhere else? Or are you in their pocket?
     
  4. Perthguy

    Perthguy Well-Known Member

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    As far as I know they don't allow you to move the admin of the Super fund but this is something you should confirm directly with them. This is what I was told when I wound up my fund but as the info is from 2015, it may no longer apply:

    We advise that the steps involved to wind up Self-Managed Superannuation Fund in 2015 are as follows:

    Step 1: All assets must be converted to cash and deposited into your Fund's ANZ V2 account.
    In the case above, this would mean selling all ETFs and LICs, which may incur a tax on the capital gains.

    If you are thinking of starting up the fund then moving the management elsewhere, I would suggest this is not ideal way to go about it.
     
  5. Hodor

    Hodor Well-Known Member

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    I will be happy to stay at 799. If fees increase greatly above CPI I would be looking at moving and want to be informed beforehand.
     
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  6. Perthguy

    Perthguy Well-Known Member

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    It's a risk of course. To give you some idea of their track record, the fee in 2006 was $599. The fee in 2016 was $799. That is not an excessive increase in fees. The problem being that past performance is not an indicator of future performance.

    https://www.esuperfund.com.au/fees/fee-history
     
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  7. wombat777

    wombat777 Well-Known Member Premium Member

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    As we learnt yesterday, past fees are not an indicator of future fees.
     
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  8. Redwing

    Redwing Well-Known Member

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  9. Zenith Chaos

    Zenith Chaos Well-Known Member

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  10. trinity168

    trinity168 Well-Known Member

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  11. Redwing

    Redwing Well-Known Member

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  12. orangestreet

    orangestreet Well-Known Member

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    I have just started the process of investigating eSuper as a potential option for my SMSF. Love their website. They have identified all the aspects that could scare people off with lack of knowledge and answered most of the questions beautifully. There are almost no blind spots in their educational material at least.

    The few things that I am yet to find out / learning:
    • Cost of insurance. Is it worth having some funds remaining with my previous fund to maintain insurance premiums bought in bulk? However, the insurance provider that eSuper prefers is the same as my existing insurance provider.
    • Can I roll-over only a part of my funds from my previous Super account into the new one? I am guessing yes .
    • If my employer can/will make (mandatory employee) contributions to my SMSF. I am guessing yes .
    • Tax liability at the end of the year; don't need nasty shocks.
    Will take my time. But it appears more and more that this will be the path I will take (SMSF, not necessarily eSuper). Reading Michael Homes book about industry super funds opened my mind to the possibility of an SMSF much more than any other time in the past. More so than fees, it is the lack of transparency and control that makes me drawn towards an SMSF.

    Anybody here with eSuper? Or an SMSF per se? Would love to hear more.
     
  13. wombat777

    wombat777 Well-Known Member Premium Member

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    :( the range of ETFs is very limited.
    :(:( the good lics are not available
    :(:(:( SOL is not available ( also not available in ING Direct ).

    So what are the best "Thornhill" companies in the ASX 300? Are there dividend payers in the same league as SOL for 10-12 year total return performance? (see this post.).

    Exercise for the weekend - do some backtesting of the entire ASX 300 in sharesight.
     
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  14. iggster

    iggster Active Member

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    You might also want to look at the

    Super Top 10 ratings

    It's very interesting and you can see the Top 10 for the various risk levels (capital stable, balanced etc.). HOSTPLUS have done well recently.
     
  15. trinity168

    trinity168 Well-Known Member

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    Thanks @iggster. What I haven't done is actually look at them on a longer time frame. The site only shows 3 years return and the past 3 years have been relatively good share market overall.

    Somehow I had the impression that with australian super, I can select ETFs and LICs. Need to double check that.

    Cheers.
     
  16. iggster

    iggster Active Member

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    If you click the Options link you can see the 1,3,5 and YTD performance figures across each of the options.

    Australian Super has a limited number of ETFs e.g.you cannot pick NDQ (NASDAQ Top 100) and I could not pick any LICs e.g. AFI, ARG, MLT, WHF so if you want to do that Australian Super may not be the fund for you.
     
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  17. wombat777

    wombat777 Well-Known Member Premium Member

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    General intent of the below is to aid with stock selection if you use one of these Direct Investment super funds that include ASX 300 stocks in the available investments.

    I ran a backtest on each of the individual stocks in the ASX 300 for 12 years, picking a start date in March 2005. Had to work through a fiddly process via a yahoo lookup spreadsheet to extract closing stock prices for the opening trade. Since not all the stocks existed in 2005 I picked the date at which the individual stocks appeared on the ASX.

    Sharesight has done it's best to work out per annum performance for each stock. I've sorted the report by Sector and Dividend return.

    I've also provided the Excel Spreadsheet I used for the import of the data to Sharesight.

    Use at your own risk, do your own research - edit some of the data pulled via yahoo downloader spreadsheet for initial trades is sketchy so do you own research.
     

    Attached Files:

    Last edited: 25th Mar, 2017
  18. Hodor

    Hodor Well-Known Member

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    Thanks Wombat, I can't seem the wrap my head around some of the results.

    For instance;
    TPM has a yield of 5.08%
    HGG has capital gains of over 400% and divs of over 100%. It was ~$1.50/share back in March '05 and is now ~$3.70/share.

    What am I missing?
     
  19. wombat777

    wombat777 Well-Known Member Premium Member

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    Maybe this breakdown for TPG helps? The yield is annualised.

    Screen Shot 2017-03-25 at 5.31.42 PM.png

    I can provide this breakdown for HGG. Perhaps sharesight is confused?

    Screen Shot 2017-03-25 at 5.35.44 PM.png

    You can always signup for a free sharesight account and check these stocks yourself? You would need to enter these trade parameters:

    Screen Shot 2017-03-25 at 5.48.14 PM.png



    I can't get back into my sharesight account. Maybe backtesting a 300 share portfolio broker their server :confused::eek:
    Screen Shot 2017-03-25 at 5.45.07 PM.png
     
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  20. wombat777

    wombat777 Well-Known Member Premium Member

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    The discrepancy seems to be in the shareprice that yahoo pulled for 1 April 2005 @ 0.07008. So clearly I need a more reliable method than Multiple Stock Quote Downloader for Excel .