# Your superannuation when you retire



## kerosam (2 December 2005)

i have spoke to about three financial planners and attend some financial planning seminars for the past 12 months. all of them are strong advocate to use ASX as a wealth creation vehicle especially in spuerannuation.

but one question i have yet to ask, and maybe some forumites can enlighten me, is that if the ASX has a crash when i retire, wouldn't my superannuation return drop like hell?


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## bvbfan (2 December 2005)

*Re: - your superannuation when you retire.*

You could buy XJO puts to insure your portfolio
Or buy individual puts on the shares you own


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## kerosam (2 December 2005)

*Re: - your superannuation when you retire.*

bvbfan,

i'm quite new to the stock market. can you elaborate on XJO and the terminology 'put'? and how can i buy insurance for them?

thanks in advance.


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## It's Snake Pliskin (2 December 2005)

*Re: - your superannuation when you retire.*



			
				kerosam said:
			
		

> i have spoke to about three financial planners and attend some financial planning seminars for the past 12 months. all of them are strong advocate to use ASX as a wealth creation vehicle especially in spuerannuation.
> 
> but one question i have yet to ask, and maybe some forumites can enlighten me, is that if the ASX has a crash when i retire, wouldn't my superannuation return drop like hell?




Yes!


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## money tree (2 December 2005)

*Re: - your superannuation when you retire.*

kerosam

Not sure what you are asking.

If you make 10% return over say 39 yrs, and then the market 'crashes' 20% on the 40th year, what is your overall return?

Seems absolutely ridiculous to be a nervous nelly about something so unlikely, so distant and so inconsequencial.

What answer would you like? 

"Dont invest your super in shares cos the market might crash"

"Invest in something with no risk"

   :headshake


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## Nick Radge (2 December 2005)

*Re: - your superannuation when you retire.*

Don't think of your superfund as a vehicle for capital growth. That is only part of the equation. The important part is the income produced. Markets fall, markets rise. You're goal is to build the income stream and forget the capital (within reason).

My superfund only exits a stock when I feel that the company will go under, or if the dividends cease. So long as I reinvest my dividends, add some capital here and there and take the long term view, when I retire my income stream is what will support me, not the capital growth. A superfund is designed to be built to be provide income.

Nick


This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.


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## bvbfan (2 December 2005)

*Re: - your superannuation when you retire.*



			
				kerosam said:
			
		

> bvbfan,
> 
> i'm quite new to the stock market. can you elaborate on XJO and the terminology 'put'? and how can i buy insurance for them?
> 
> thanks in advance.




XJO is the ASX S&P200, which is considered the benchmark for gauging performance of the large capitalisation stocks in Australia. And for comparing performance of other assets and aslo a benchmark that managed funds try to track.

Now the movements of the top 200 stocks influence the way the XJO moves.
So when Telstra moves a large amount it will move the XJO as TLS is the biggest constituent of the XJO.

XJO is considered the market portfolio (along with the SPI which is supposed  to track the XJO on the futures market)

Options are basically instruments that give you the option but not obligation to buy or sell an instrument or share at a fixed price at a time in the future.
The option to buy is named a call option and the option to sell is named a put option 
So when you take a put option, you have the option to sell the underlying asset at the exercise price to the person who sold it to you.

Say you bought a put option on TLS a few months ago that expires in December with a $5 exericse price. Say you owned TLS shares which you paid $5, you would exercise the option and get to sell TLS at $5 to the person that sold the put option to you, since TLS is under $4 now you would sell for $5 so you have locked in the $5 price by buying the option.
The option may have cost you some money, but it has protected you from the fall to $4 in the TLS share price.

There is more info on options at the ASX site www.asx.com.au which I suggest you read, its a lot easier to understand than from me explaining it here


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## Julia (2 December 2005)

*Re: - your superannuation when you retire.*



			
				kerosam said:
			
		

> i have spoke to about three financial planners and attend some financial planning seminars for the past 12 months. all of them are strong advocate to use ASX as a wealth creation vehicle especially in spuerannuation.
> 
> but one question i have yet to ask, and maybe some forumites can enlighten me, is that if the ASX has a crash when i retire, wouldn't my superannuation return drop like hell?




As Snake has said:  "Yes".  You could be unfortunate with the timing.  But refer Tree's advice.  I would guess you are quite young and have many years to build up your investments.

If you get together sufficient funds to use a Self Managed Super Fund, choosing high yield stocks, then when you reach retirement age, you should be able to draw an allocated pension (or term allocated pension) from the equivalent of the dividend income, thus still allowing your capital to simply go with the ups and downs of the market, within the confines of the government's rules about minimum and maximum allocated pension amounts.
This is apparently in the process of changing as account is taken of the likelihood of our increased longevity.

There is sometimes a mistaken impression that superannuation is something more than simply a vehicle in which you hold your investments.  The reason for most of us wishing to hold our investments in Super is the favourable tax treatment they receive, i.e. 15% which is almost certainly less than most of us would be paying otherwise.

My suggestion would be to get more experience and education about investments in general, the stock market, superannuation and tax issues before you make any definite decisions.

All the best

Julia


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## kerosam (3 December 2005)

*Re: - your superannuation when you retire.*

thanks bvbfan, appreciate your time and help.


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