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Vanguard - SMSF

Discussion in 'Other Asset Classes' started by Greyghost, 7th Apr, 2016.

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  1. Greyghost

    Greyghost Well-Known Member

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    Morning.
    I read the majority of Tony Robbins new book. In it he talks about fund managers and the level of fees you pay in managed fund (2-4%pa).

    He then goes on to talk about index funds and how if you invested the same amount of money in that vs a managed fund (eg industry super vs vanguard) the compounding power of not paying that extra 2-3% in fees over many years results in a 60% difference in the final balance..
    He also says that index funds over every 10 year period have outperformed 95% of fund managers in America.

    Looked at my super online yesterday.
    I'm with Care Super.
    The fees are staggering.
    No wonder their service is so good. We are paying for the massive amounts of overheads in those business'.

    So I was doing some research and considering vanguard index funds.
    You can allocate your cash between: property, share, cash, bonds etc to manage your own risk profile.
    Fees are .75%pa. Significantly less than industry super.

    Does anyone here have their super or even cash in a vanguard account?

    (Before it is said, I am aware of smsf costs, audit costs, ASIC annual fee for trustee coy etc. These need to be worked out as a % cost, added to the fund fee of .75% and then compared to the industry super account fees to see what is the actual comparative fee % overall).

    Thoughts welcome.
     
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  2. Joshwaaaa

    Joshwaaaa Well-Known Member

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    I use australian super members direct, lets you trade asx-300 and ETF's via just your standard super fund for only an extra couple hundred dollars a year, which when I looked was a fair bit easier and cheaper then setting up a smsf. I hold maybe 50:50 , aus super standard product: etf's and shares held via members direct
     
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  3. radson

    radson Well-Known Member

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    I dont think you will find too many managed funds now that charge 2-4% unless that includes performance bonus or international funds and still more 2% than 4$.
     
  4. Hodor

    Hodor Well-Known Member

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    I am moving mine to ING Shares only fees are $300pa and brokerage, no % of holdings type fees. Very similar to the Australian Super Members Direct product, per my research fees will be even lower.

    I plan to purchase a couple of the main ETFs and LICs with the account.
     
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  5. Hodor

    Hodor Well-Known Member

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    Just found this in some terms and conditions,

    "you can hold up to 80% of your total ING DIRECT Living Super account balance in the Shares category and you can invest a maximum of 20% of your total account balance in any one listed security"

    So maybe the ING product isn't the best.
     
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  6. Joshwaaaa

    Joshwaaaa Well-Known Member

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    That is the same guidelines as the aust super members direct
     
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  7. Hodor

    Hodor Well-Known Member

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    Thanks, I was just typing to look that up.
     
  8. Redwing

    Redwing Well-Known Member

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  9. tvadera

    tvadera Well-Known Member

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    I am exploring this option as well instead of setting up SMSF

    I am clueless about super except it gets deducted each pay cycle , only after reading posts on this forum I am keen to know more and take it within my control.

    My super is spread across 2 funds, time to consolidate at one place

    Any one knows how ING product can support life and TOTAL perm disability insurance?
     
  10. Hodor

    Hodor Well-Known Member

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    Check out this link, Living Super

    Just below where it says "how living super works" you can click insurance.
    It offers both life and TPD insurance, doesn't give details there, maybe ring them.
     
  11. pinkboy

    pinkboy Well-Known Member Premium Member

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    I think you should start 'getting a clue' about Superannuation - it's your money after all. Age need not be a discrimination factor for Superannuation. The earlier you show interest, the earlier you can control its destiny.

    Firstly, its not 'deducted' from anywhere, its on top of your pay you receive, paid by your employer (and you can salary sacrifice if you wish). Its a means to have funds available for when you retire. You can take control and accelerate this via SMSF, or let your industry fund take care of it for mediocre to ok returns.

    Consolidate your funds should be your first port of call, as your net growth is being eaten away by the second set of fees.

    pinkboy
     
  12. tvadera

    tvadera Well-Known Member

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    Agree pinkboy

    I am in the process of consolidating it. Yes it's on top of my base wage, should have worded it correctly
     
  13. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Take care with the belief you need a SMSF to take control of super. Many funds allow members to choose a limited number of defined strategies (ie growth etc) but some allow choice of specific investments (within their policy guidelines). They will have an APL (authorised product list) of what they permit.

    The larger industry funds tend to offer this as a cost alternative to a SMSF. Remember too that a SMSF means costly life cover (or NO cover !!), personal responsibility for all decisions and outcomes where a industry fund handles all back office, reporting etc and your balance is insured against fraud, theft etc.

    The Product Disclosure Statement (PDS) will explain fees, charges etc. They do vary between funds but are often similar. These costs may including trading (brokerage) fees, switching fees, margins between buy / sell prices, account fees etc and a range of other costs you may not currently expect. eg : Cash rates are very low. The spread is a implied fee ?

    The other costs to consider with self managed super of any form is inexperience, uninvested funds and poor choice. You are betting on out performing some very experienced and qualified people who use hedging, derivatives and investments a small fund cannot access eg Office buildings, factories etc. In most cases everyone hears about the guy who self managed and made 15% returns. That is a sign of either excellent timing, good luck or judgement but ultimately its hard to replicate year on year. esp when a market falls. You dont hear about those years.
     
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  14. CatCafe

    CatCafe Well-Known Member

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    Did you end up moving to ING? If so, how are you finding their product?

    I too, am also considering switching from my industry super fund (and paying roughly 0.75% of asset value in admin & management fees) to ING, with the intent of holding ETFs and LICs.
     
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  15. Hodor

    Hodor Well-Known Member

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    Not yet.

    On my to do list, just been busy
     
    Last edited: 1st May, 2016
  16. andyyeates

    andyyeates New Member

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    Actually, Care Super is one of the cheapest industry super funds, ($78 per year and their balanced fund is around 0.6%) - and one of its main benefits is that it does offer a members direct function where for $300 a year you can sign up for their investment platform and invest directly in shares in the ASX 300, and also a range of ETFs, LICs, and TDs. So without changing super, you can buy those Vanguard Index ETFs.

    ING Direct also offers this, as does Aus Super and a number of others.
     
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  17. ErYan

    ErYan Well-Known Member

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    What are the constraints for Care Super's direct investment option? For example ING allows only 80% of the balance to go into shares and no more than 20% in any one share. A little bit limiting but the biggest irk is that I can't put it all into shares and that I always need at least 1% of my balance in the cash hub which earns almost zero return. ING wouldn't let me leave only 1% in cash hub too because it said that I needed the reserves to pay for the next month's fees even though the upcoming dividends would have covered them. Apart from that reasonably happy with ING.

    I reviewed Care Super's list of ETFS and LICS, not very comprehensive at this stage but if the list grew to include Vanguard ETFs and a few more LICs e.g. it does not include ARG, BKI, WHF, CIN, QVE etc it might be worth considering for me personally.
     
  18. House

    House Well-Known Member Premium Member

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    Nice and simple explanation about the significant difference fees can make;

    "Three friends aged 35 all have $100,000 to invest in super.

    The three invest their money into 3 different super funds but are lucky enough to all benefit from the same gross investment return of 8% p.a.

    At age 65 they get together to compare their super balances.

    • David invested in a retail fund (like MLC, Colonial, etc.) and paid 2% p.a. in fees.

    His balance was $574,349

    • Mark invested in an industry super fund and paid 0.90% p.a. in fees.

    His super balance was $782,860

    • Sophie invested in a passive (index) investment option and paid fees of just 0.20% p.a.

    Her balance was $951,838.

    The same investment amount, the same returns and Sophie has nearly 70% more in retirement savings than David!

    More importantly, historically, 96% of active fund managers fail to outperform (in terms of investment returns) passive fund managers in any 10 year period."

    A small difference in fees could reduce your super balance by 70% - Property Update
     
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  19. Redwing

    Redwing Well-Known Member

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    What platform did Sophie use? SMSF or....
     
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  20. austing

    austing Well-Known Member

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    I doubt you'll find anything cheaper than this for most people, index option or not:

    Superannuation Investment Choice

    Our fee is cheaper than 0.20% but only because we have substantial investments in our SMSF.
     
    Last edited: 16th Oct, 2016