Would you keep superannuation in high risk or move to mid/low risk option?

Such a great post! Thank you!

 

Another gem found in this post on the tax free pension on after tax contributions. Thank you @austing !

 

When I find it I'll drop it in the letter box. The thread is worth the time too.

 

Don't get hung up on LICs etc as mentioned in your previous post, they're no silver bullet. Index funds or Super fund preset options will likely achieve the same goal.

The main thing is to get as much as you can into the most tax effective environment while you can. You can vary the investment option later to suit your needs / SANF.

 

A mere twig amongst these mighty branches, but this is what I'd consider doing (as I like simplicity).
1. Move a percentage of funds to the next lowest risk level -if it's still possible to do that. Maybe 40-60%. I think, like me, you just wouldn't be comfortable in the lowest risk category. But if you are, you could move 10-20% of the funds to the very conservative level (if possible). If you can't split it up, then move it all to medium risk. Not advice.
Having said that, I 'm leaving mine at high risk, head in sand.
2. Sell a house now and pay off the debts.
3. Seriously consider selling another one and kicking up your heels.

 

Basic question: how do the returns on the super fund presets include franking benefits? I believe if you have shares in a SMSF then the franking benefits and share ownership is clear. I don't understand how it is incorporated in a non-SMSF using presets...

 

I'm of the feeling that there's one waiting to happen soon simply going by the previous crashes of each decade since the 80s.

late 80s - Famous Black Monday
late 90s - Asian Financial Crisis
late 2000s - GFC; the one which me & most of us here have experienced first hand
late 2010s - ??

 

I have the answer! It will happen soon as the salesforce tower is built.

Episode 656: Bubblelicious



PS. Please do not take the above comment seriously. Other than that, this has been a great thread and good questions beget good answers.

 

If truly undecided, have an each-way bet.

Transfer half to a more conservative option.
Marg

 

Have a look at the quality of the shares you hold. Are they good income-producing assets that will produce good income in a crash? Are these assets ones that you would "comfortably" continue buying even as the market corrects/crashes? What is the quality of the underlying assets?

With the market at highs it might be an opportunity to rebalance your share investments ( that will ultimately depend on what you are holding though ). That could include deciding what to do with the rest of your super in terms of how you have it invested.

I also highly recommend reading the Thornhill book and getting to his course if you can. It gives you a sound mindset around which you can base your long-term investing. I'm also a subscriber to the bogglehead low-fee approach as it just makes sense.

 

@wylie have you compared asset growth and considered future growth of your assets? You mentioned you could sell your property to pay off all debt, if your plan was to sell at a future date anyhow, would it make sense to sell it now, is that house at a peak in time, are the returns considered to flatten out over the next few years or even decline etc?
You will have to consider all taxes etc etc first, but if your house growth and rent combined is generating say 3% clear after all taxes, you would benefit by paying down debt at 3.8% debt or what ever your debt rate is. If your super/shares are generating or you believe will generate much more then consider this option as well.

For example say your house is worth 1 million, say after all taxes it gains 3% return in growth and rents combined. That's 30k.
Say you wanted to keep it 5 years before selling, compound that 3% return and you will have made $159,274. Do you think that house will make another 159k in 5 years time? Otherwise you could sell it and pay off the higher debt amount which is a better move and also safer.

I'd go see your accountant and run some figures through before you do anything.

 

Have a look at the entry / exit costs for the investment choices within your super. Also broadly look at the fees charged.

Use that as one critical consideration for selecting a super provider. For example a 1% versus a 2% fee can really eat into your returns over time.

The asic super calculator is a good start.

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/superannuation-calculator

 

1987
1997
2007
201x

have a guess what will hit us in the next 6 months LOL

 

Great query! Would love to know the answer as well.......... any takers?!

 

@wylie, in my earlier post, I did mention that we "Withdraw minimum of 4% of Super balance each year as tax-free income to fund living expenses and lifestyle (going up to 5% in 3/4 years time - 25% pay rise)".

I forgot to mention that one can do this as an annual once off payment, say in early July.

So, if a couple have the cap of $1.6M each in Pension phase, then they can pay themselves a pension $128,000 (the minimum 4%) as a once-off payment, deposit this in an Offset and live off these funds over the year.

In this way, their money is effectively earning 4%+ after tax (whatever their loan interest rate is) instead of say 1.5% after tax (whatever the cash rate is in their Super).

An after-tax saving of up to $3,200pa or over $61pw for doing nothing.

So many way to make money and save money .

 

I feel this is not the appropriate thread to discuss such things. Nevertheless, last one from me on this topic. Even Mr. Moneymoustache feels that a recession is lurking around the corner.

Great News: There’s Another Recession Coming