Thoughts on my investment Strategy

Discussion in 'Share Investing Strategies, Theories & Education' started by Big A, 23rd Jan, 2019.

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  1. FredBear

    FredBear Well-Known Member

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    I thought super was the easy part too. Is there something I too am missing? I'm just using AustralianSuper and AMP, no SMSF.

    As it is now January I'd put $100k into super now, and then $300k in July (next financial year), rather than $300k now. Then in July you will have contributed $400k rather than $300k.
     
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  2. Big A

    Big A Well-Known Member

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    So your telling me they want to charge you as much as $12k p.a and also put you on a platform that will cost you another $5k p.a to invest $800k into index funds. That’s 2.1% worth of fees every year so they can sit with you once or twice a year and see how your investments in index funds are performing. I’ll tell you how they are going to be performing. They will be performing 2.1% below the market return.
    These guys are insane. I would run for the hills.

    If an adviser wants to charge you anymore than $3k-$4k to go set up a simple index based portfolio across both your personal and super then I believe you are over paying.
    And yes super is not that hard to work out, but there are a number of rules that if you don’t comply with, could end up costing you. Again do your homework and work out exactly what you want to do with the super and then just have the adviser look over it and give you the tick to ensure you are compliant.

    The other thing you will find is that most advisers will only be able to advise you with relation to equities. They probably won’t give you advise on other products like unlisted property trusts and most likely not something like mortgage syndicates. From what I have seen the advice game is full off advisers 101. They have a very narrow view and can only point you in the direction they are licensed for and on what their text book taught them. Many tend not to have much real life experience across the different asset classes.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I think super is very complex. But if a financial planner can learn it anyone can. The difference though is that they may have a lot of clients so may have 100x more experience than any individual person may have and they may pick up tips and strategies which you may not - you don't know what you don't know.
    Also with anything it is good to get a second opinion. I am sure most doctors would not treat themselves - or do operations on spouses etc because they may be biased, but they sure would check anything a surgeon would be proposing to do before allowing the spouse to be operated on.

    In my law masters degree there is a whole subject just on the estate planning aspects of super. You could do a whole masters degree on it and still not know it all.
     
  4. ChrisP73

    ChrisP73 Well-Known Member

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    Fair enough!, but I'm going to see a lawyer like you about estate planning (including wrt super) not a fp. I'll happily pay for that professional advice! But of course you know that already being a lawyer specialising in that area.

    Tips and strategies, yes know what you mean but for most people it's pretty straightforward. In the margins, eg high income earners, small business owners, etc, that's where the dusty corners of the law can be leveraged.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    'Reserving' is something I just discovered recently
    A person could, potentially, contribute in one year yet it can be allocated in the next financial year.
    This way that person could get a tax deduction for $50,000 in one year instead of $25,000 in each financial year.
    Could help with the sale of a property with a large CGT bill for example.

    Another is the carry forward rule which allows a person to contribute and deduct up to 5 years worth of caps where they haven't made full use of them.
    Someone oout of work for 5 years with young kids, for example, could contribute $125,000 to super and claim the lot.

    This is even better where there is a large capital gain.

    A couple of young retired spouses with assets in a trust could make use of one or both of these to realise some decent capital gains, to live on and to partially get into super where is will be taxed even less going forward.
     
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  6. FredBear

    FredBear Well-Known Member

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    Note the carry forward rule is fairly new, so for FY20 you could only carry forward the part of $25k you haven't used from FY19, so the max for FY20 was $50k. In FY21 it will be $75k, FY22 $100k and then finally in FY23 $125k. As Terry says it's a good way to reduce tax on a large CG like a property sale.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    2018/19 year onwards according to the paper I read.
     
  8. FredBear

    FredBear Well-Known Member

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    2018/2019 was the first year you could accrue unused cap amounts, and 2019/2020 was the first year you could use these.
     
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  9. MWI

    MWI Well-Known Member

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    Any suggestions as I too appreciate such feedback, any here above excess in pension phase? Do you draw down as one off lump sums or regular set amounts, or pay 15% tax and keep accumulating, or just use tax free components funds only, or continue reinvesting?
     
    Last edited: 14th Jan, 2021
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  10. MWI

    MWI Well-Known Member

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    Agree with you here. There are Super business side of things and investments and then there is estate planning side too.
    Hence why the rules and business side I have some comprehension and keep up keeping up with the rules and regulations changes, yet I have total control over my investment decisions, whereas I left my estate planning side to the specialist expert (SMSF specialist at Super and Tax Law).
    Financial wealth is not just about accumulation it is also about preservation.;)
     
  11. MWI

    MWI Well-Known Member

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    I have been using Super Contributions Reserving strategy (refers to an arrangement whereby Contributions made in June of a Financial Year are allocated to the Member in the next Financial Year.) for number of years for both of us members in our SMSF.
    Had also Special Reserves which the government now axed, such as Anti-Detriment Reserve, Special Funeral Reserve which will have to wind up soon too, etc...
    I suppose most here in this thread discus the investing side and Super business side of rules/regulations without realizing tax side too.
    I have been fortunate enough to learn from the specialists and then use their expertise.
    I suppose one easy way is to ask how many pages does your SMSF Trust Deed have, if over 100 pages then you can compare?
    As you know @Terry_w there are Trust Deeds and Trust Deeds, right? All SMSF need such rules and regulations otherwise one may not even be able to administer certain actions if they are not contained in their Trust Deeds. Many don't even know or realize that when certain government Super regulations change their Super Trust Deeds may require changes/updates too.
     
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  12. FredBear

    FredBear Well-Known Member

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    I'm not in pension phase yet, but as I understand it you can move up to 1.6M into pension phase and the rest stays in accumulation. So you effectively have two accounts:

    Pension phase account, max 1.6M, 0% tax, need to make a certain % withdrawal each year
    Accumulation account, no max, nominally 15% tax

    Note that depending on the investments, the actual tax on the accumulation account could be a lot less than 15%. I've seen that a figure of 6.5% is typical. This is a result of franking credits and a lower capital gains rate.
     
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  13. MWI

    MWI Well-Known Member

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    Thank you @FredBear and I do know this but I was wondering what the real life cases are doing if anything? Rules are one thing but perhaps people's lifestyles or experiences dictate otherwise? Would they take out some as lump sum to help their adult children or grandchildren, would they continue investing in SMSF regardless. I was wondering what people chose to do?
    So at this stage most are just investing in same environment and minimizing tax on the accumulation account?
     
  14. MsNewbieInvestor

    MsNewbieInvestor Well-Known Member

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    Ok, thank you.
     
  15. MsNewbieInvestor

    MsNewbieInvestor Well-Known Member

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    Thanks, that's exactly what I plan to do -along with concessional contributions.
     
  16. MsNewbieInvestor

    MsNewbieInvestor Well-Known Member

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    I think I (clearly) made a wrong choice. Unfortunately, they expect to be paid before they provide you with a Statement of Advice, so you really don’t know what their suggestions are going to be until they present them to you.

    Perhaps I should have asked better questions during the evaluation process. All I know is that I am asking much better questions now (from research/reading), and they are not answering them to my satisfaction. I no longer feel confident in their advice.

    I asked them about unlisted property trusts and MSs yesterday. It will be interesting to see what their response will be.

    I think I made the mistake of not researching prior to approaching a FP. I placed too much trust in them giving me the best advice.

    Thank you. I haven’t signed the SOA, so I don’t think I’m trapped.
     
  17. apk

    apk Well-Known Member

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    Correctly me if I am wrong, I think this is what @Terry_w is referring. (Table 2)
    Key superannuation rates and thresholds
     
  18. MWI

    MWI Well-Known Member

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    Ah looking at hindsight.....?
    Also was mentored early enough to always invest money we could afford to lose meaning not 'number that would hurt' otherwise I think we are gambling instead of investing?
    Now I wouldn't perhaps even invest in an exploration stock which made us 30 times from initial investment as then the decision was purely based on naivety. I thought I am young let's take total control of our Super or other finances, invested under different entities too, and if I suffer consequences at least I will be responsible, right? Luckily we sold at 3000% gain back then as it doesn't even exist now...luckily we then switched to IPs, so RE asset class and so on....
    Would I invest with same mentality right now, no, no way, many years have past, different economy, different circumstances, different amounts, different lifestyle, different experiences, etc....
    As you pointed out yourself, it may depend on $ amount you feel confident in that exposure in ASX so you can sleep soundly at night. IMO, property allows me to be exposed with little risk and leverage no margin calls to the tune of millions. So shares become an income exercise while IPs became my wealth creation exercise.
     
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  19. JasonC

    JasonC Well-Known Member

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    Big A,

    Thought I'd ask you this question in your thread if you don't mind ... what software (if any) do you use to keep track of your investment portfolios?

    I currently have some direct shares, some shares/funds/sma's through a wrap, unlisted property trusts, a couple of residential investment properties, some P2P lending and various investment loans associated with them. I've tried using Sharesight to get a consolidated view but it is quite difficult for the P2P lending and the SMA's.

    I currently update a spreadsheet quarterly with the asset values - which shows our net asset position change over time, but it doesn't split out growth due to additional contributions and capital growth. For that I need to look into various reports from different providers.

    Thanks,

    Jason
     
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  20. Big A

    Big A Well-Known Member

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    Looks like you have found what your comfortable with and what works for you.

    It has taken me a while but I am now comfortable with investing in equities and having a majority of my wealth in it.

    No, I don’t invest what I can afford to lose. That’s why I don’t buy individual shares and buy the index. I don’t see buying the index as risky. Price volatility sure, but I don’t think that necessarily equates to risk.

    Plan is to have the bulk split between Aus index and International index. I am willing to take the risk that the top so many hundred companies between Australia and the rest of the developed world will not go broke on me.
     

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