# Self Managed Super



## jono1887

I've been wondering how you go about managing your own super? And are you allowed to contribute to your super from income you earn from trading? Is this contribution eligible for the govt co-contribution scheme? 

I would like to start up my own super fund and channel some of my profits to it to gain the co-contribution and manage it myself...


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## jono1887

Also, are contributions made to super this way tax deductible??


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## awg

IMO, it all depends on how old you are.

I trade in my SMSF in pension phase, so I pay no CGT, and almost no income tax.

If you are a young guy though, which I sense you are, there is no point, except that income in super is taxed at 15%.

so unless your average tax is above that.

the biggest prob with super is that u cant withdraw until u meet the conditions, ie 55+, and the Govt keep mucking with the rules.

If u want to set up a cheap superfund, check out Esuperfund..$600pa audit, was no setup fee, by far the cheapest


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## Aussiest

I'm just wondering awg, or anybody else who's reading, couldn't you put a designated amount into a high interest earning account each week and call that 'your super'? You'd have to be pretty disciplined though.

Any thoughts? 

(At least the Govt. couldn't get it's grubby hands on it).


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## investorpaul

awg said:


> If u want to set up a cheap superfund, check out Esuperfund..$600pa audit, was no setup fee, by far the cheapest




I never knew you could get it done so cheap.

I am definately setting one of these up. I hate all superfunds there fees are either too high or their performance to low.

I would much rather manage my own super fund. AWG in your opinion what amount of super would you need to make it worthwhile (ie enough to cover fees and growth the account)?


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## awg

Aussiest said:


> I'm just wondering awg, or anybody else who's listening, couldn't you put a designated amount into a high interest earning bank account each week and call that 'your super'? You'd have to be pretty disciplined.
> 
> Your thoughts?




Certainly..but in order to enjoy the taxation advantage, you would need to have a superannuation account properly set-up.

When I said age is most important, the amount you have is also paramount.

Even Esuper advise minimum $50k to start SMSF.

Otherwise, you are much better just contributing to a low cost industry fund, in the Cash option, if Cash is where u want to be.

admin of a SMSF is a PITA.

http://www.esuperfund.com.au/


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## investorpaul

awg said:


> Even Esuper advise minimum $50k to start SMSF.




I have worked full time for a few years now, I just did the quick sums and it will prob make sense for me to do this in a couple of years.

I'll have to set a reminder, my current super funds ok but I would much prefer to manage my own.


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## Aussiest

awg said:


> Certainly..but in order to enjoy the taxation advantage,




Could you save $30-40k, enough for a deposit on a property, buy the property and use the balance of the rent as your super contribution?

Assume i have stamp duty covered (add $15k to figures quoted above) and have found property which will give me a sensible return on my investment.

I'll research the tax benefits of super tomorrow.


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## awg

Aussiest said:


> Could you save $30-40k, enough for a deposit on a property, buy the property and use the balance of the rent as your super contribution?
> 
> Assume i have stamp duty covered (add $15k to figures quoted above) and have found property which will give me a sensible return on my investment.
> 
> I'll research the tax benefits of super tomorrow.




I dont think you can do that.

You can/could borrow via a special Installment loan, to buy property in Super, but these have conditions, including a conservative level of gearing, I dont think negative gearing is permissible.

So you need to stump up about 40% of purchase price.

You would need an accountants advice

Simpler Super is bullsh!t

here is a link for you, plenty similar, google "property investment in super"

http://www.behanlegal.com/Knowledge...nBorrowtobuyRealEstate/tabid/332/Default.aspx


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## Julia

Aussiest said:


> I'm just wondering awg, or anybody else who's reading, couldn't you put a designated amount into a high interest earning account each week and call that 'your super'? You'd have to be pretty disciplined though.
> 
> Any thoughts?
> 
> (At least the Govt. couldn't get it's grubby hands on it).




We already have several threads on SMSF's.   Before starting a new one, might be good to do a search and add to an existing one as it becomes messy and confusing.

Mods:  if you get a chance, perhaps merge this thread?


Here is one with fairly comprehensive discussion.

https://www.aussiestockforums.com/forums/showthread.php?t=819&highlight=managed+super

Re your suggestion above:  if you set up a SMSF, then there is nothing stopping you from putting it all into a 'high interest account'.  Not sure where you will find such an entity at present, though.

But if you thought you wouldn't bother setting up a SMSF and would just put cash into an ordinary account, calling it Super to get the tax advantage, then no, you could not do that.

Don't underestimate the rules which attach to SMSF.  ATO takes these very seriously.

Before deciding, I'd suggest you search the ATO and ASIC websites for all the info about SMSF's.

The main point of Super, whether public or self managed, is the low tax environment.  Super is simply a vehicle for holding assets in a tax advantaged environment, i.e. 15%.


The government doesn't get its hands on SMSF money, except for the tax paid.   



investorpaul said:


> I never knew you could get it done so cheap.
> 
> I am definately setting one of these up. I hate all superfunds there fees are either too high or their performance to low.
> 
> I would much rather manage my own super fund. AWG in your opinion what amount of super would you need to make it worthwhile (ie enough to cover fees and growth the account)?



Depends on what outlay you have on accounting and audit costs.
As has already been mentioned, there are the budget organisations like E-Super.
I prefer to have my own accountant, and a separate auditor.
Usually allow around $2000 p.a. for tax return, audit and ongoing advice where required.  More than worth the money imo.

The concensus re minimum amount is usually suggested to be about $200K.


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## Aussiest

awg said:


> I dont think you can do that.
> 
> You can/could borrow via a special Installment loan, to buy property in Super, but these have conditions, including a conservative level of gearing, I dont think negative gearing is permissible.
> 
> So you need to stump up about 40% of purchase price.
> 
> You would need an accountants advice
> 
> Simpler Super is bullsh!t
> 
> here is a link for you, plenty similar, google "property investment in super"
> 
> http://www.behanlegal.com/Knowledge...nBorrowtobuyRealEstate/tabid/332/Default.aspx




Thanks for the link. Thanks Julia also. 

I meant coughing up the 50k myself and treating the property as a 'retirement fund' rather than making payments into a traditional 'super fund'. 

If the balance of my repayments after expenses was roughly equal to 9% of my income, couldn't it be a good alternative? 

I am self-employed so i have to make my own payments anyway.


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## jono1887

well seems like from the fees its not going to be worth it for me. I'm only 18 and my income this year is ~20k mostly from stocks... i was just wondering if there was a way i could minimise the amount of tax i was paying by putting into a super account. I dont really trust those super funds with my money considering most of them lost **** loads of money in the same amount of time where I've made most of mine :
I guess ill just be paying my taxes this year...


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## Aussiest

Get an ABN. You're a share trader. Look at the ATO website to see whether your trading meets the criteria of 'income'. I'm pretty sure it would. A good accountant could also do this for you. 

As a share trader, you are effectively running a business. A business is made up of revenues and expenses. Your trading gains are your revenue and your expenses are:

Brokerage (both ways)
Margin lending interest
Stock borrowing fees
Internet connection
Computer accessories (hardrives, USB drives etc.)
Depreciation on your computer, laptop etc.
Depreciation on other capital equipment such as mobile phone
Your mobile phone bill
% of utilities (electricity etc.)
% of landline if use ADSL
Trading books / education

Anything you can think of that is related to trading would be tax deductable if you were able to claim it as income.

You won't have to pay tax on the full 20k.


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## Prospector

Also, you cant actively 'trade' shares in a Super Fund, as that is carrying on a business which defeats the sole purpose test.  Of course you can buy and sell shares, but that has to be in accordance with your investment strategy and Trust deed.

As Julia said, do not underestimate the power of the compliance rules in SMSF's.  Ours has been going now for over 10 years, before they became the flavour of the month.  Their explosion has meant that the ATO is out to ensure compliance is spot on.  I suspect wth the cheapie start up fees that the rules are never really laid out for you in a manner which you can understand - it takes time to do that and time is $.


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## awg

Prospector said:


> Also, you cant actively 'trade' shares in a Super Fund, as that is carrying on a business which defeats the sole purpose test.  Of course you can buy and sell shares, but that has to be in accordance with your investment strategy and Trust deed.




I dont agree Prospector.

My advice is that you can, from different SMSF specialists.

But you cannot claim any deductions.

The sole purpose test does not disallow any Investment strategy, so long as the Trust deed permits it, and it is lawful and reasonable.

You can trade CFDs, for instance in my SMSF


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## lasty

Is SMSF setup,online portfolio,audit and tax return good value at $2200 pa ?


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## jono1887

So why do you have to pay annual fees to self-manage your future?? I dont get it, im going to be the one managing it, yet im paying fees to someone annually


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## awg

The fees are for Audit, Preparation of Tax return

These are legal requirements


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## vincent191

SMSF can trade shares & options BUT margin lending is prohibited. There are very strict rules regarding SMSF borrowing money. Only recently have the rules changed for SMSF borrowing money to buy property. Check with your accountant.

If you have less than $100k and time poor SMSF is not for you. There is a high cost of compliance and you are required to keep abreast of the rules and keep strict records.

SMSF is NOT for everybody.


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## Aussiest

awg said:


> The fees are for Audit, Preparation of Tax return
> 
> These are legal requirements




That's why i am seriously considering buying a property.


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## lasty

Aussiest said:


> That's why i am seriously considering buying a property.




In your super fund?


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## lasty

Julia said:


> We already have several threads on SMSF's.   Before starting a new one, might be good to do a search and add to an existing one as it becomes messy and confusing.
> 
> Mods:  if you get a chance, perhaps merge this thread?
> 
> 
> Here is one with fairly comprehensive discussion.
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=819&highlight=managed+super
> 
> Re your suggestion above:  if you set up a SMSF, then there is nothing stopping you from putting it all into a 'high interest account'.  Not sure where you will find such an entity at present, though.
> 
> But if you thought you wouldn't bother setting up a SMSF and would just put cash into an ordinary account, calling it Super to get the tax advantage, then no, you could not do that.
> 
> Don't underestimate the rules which attach to SMSF.  ATO takes these very seriously.
> 
> Before deciding, I'd suggest you search the ATO and ASIC websites for all the info about SMSF's.
> 
> The main point of Super, whether public or self managed, is the low tax environment.  Super is simply a vehicle for holding assets in a tax advantaged environment, i.e. 15%.
> 
> 
> The government doesn't get its hands on SMSF money, except for the tax paid.
> 
> 
> Depends on what outlay you have on accounting and audit costs.
> As has already been mentioned, there are the budget organisations like E-Super.
> I prefer to have my own accountant, and a separate auditor.
> Usually allow around $2000 p.a. for tax return, audit and ongoing advice where required.  More than worth the money imo.
> 
> The concensus re minimum amount is usually suggested to be about $200K.






"there are the budget organisations like E-Super"

Are they budget?
My understanding is that they are taking trail commissions on everything so the infact the product  can work out more expensive.
They are meant to disclose this.
Can anyone confirm using Esuper that these trailing fees have been disclosed?
If so, how much are they?
There is nothing on their website. Do they have a FSG?


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## awg

lasty said:


> "there are the budget organisations like E-Super"
> 
> Are they budget?
> My understanding is that they are taking trail commissions on everything so the infact the product  can work out more expensive.
> They are meant to disclose this.
> Can anyone confirm using Esuper that these trailing fees have been disclosed?
> If so, how much are they?
> There is nothing on their website. Do they have a FSG?





dont believe they take trail coms on MINS, but dont have any in my SMSF.

ring them, they will call you back.

or email them with your detailed questions and they will email you back.

if you want to have MINs in your SMSF you will get peeled for fees by the MINs way way more anyway

that why I use equities, CFDs and cash

MINs are clunky


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## lasty

awg said:


> dont believe they take trail coms on MINS, but dont have any in my SMSF.
> 
> ring them, they will call you back.
> 
> or email them with your detailed questions and they will email you back.
> 
> if you want to have MINs in your SMSF you will get peeled for fees by the MINs way way more anyway
> 
> that why I use equities, CFDs and cash
> 
> MINs are clunky




"that why I use equities, CFDs and cash"


They will be taking a clip on each of those and that should be disclosed.
They are licensed through an AFSL holder and thats the way they can only get remunerated which is why they have to disclose all fees and commissions.


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## awg

lasty said:


> "that why I use equities, CFDs and cash"
> 
> 
> They will be taking a clip on each of those and that should be disclosed.
> They are licensed through an AFSL holder and thats the way they can only get remunerated which is why they have to disclose all fees and commissions.





you are correct.

they get a % of the brokerage via their commercial arrangement with the brokers etc...

but as a for instance, I get the lowest rates on all commsec trades over 10k, under that, not as good.

I think you will find that is disclosed.

I dont know how deep you have dug, and your level of expertise.

It may be possible that ultimately, you could do it cheaper via an accountant, but it would depend on how much you trade, the level of assets.

You could then do your calcs based on how many trades, etc etc.

It sounds like you are really doing your research, which is great.

because once you have started it is a pita to change

I dont think you can use IB brokers for SMSF (could be wrong tho)

It would be great if lower cost brokers could be used, but you may find it harder than you think...for instance IG Markets will not do SMSF

Please keep us updated.

One more thing Super regs are far more complex than most people realise, and having an expert personal accountant, who is a SMSF specialist, would be a wise move IMO.

My personal accountant is, but he would charge me $1200  setup, and audit depends on HOW MANY trades, but at least $3500pa


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## Aussiest

lasty said:


> In your super fund?




I am self-employed and it is not compulsory to have a super fund. The property wouldn't be in my super fund, it would be part of my 'retirement fund'.


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## awg

Aussiest said:


> I am self-employed and it is not compulsory to have a super fund. The property wouldn't be in my super fund, it would be part of my 'retirement fund'.




So why are your questions in this thread ?


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## Aussiest

The title of the thread is 'self managed super'. Thought perhaps that 'retirement fund' and 'super' were in effect the same thing, which in effect they are (aren't they? > both saving for retirement). I guess just hashing it out 'out loud'.

I wasn't aware of all the rules and regulations surrounding SMSFs. People generally post because they need to know something or they have knowledge to impart.


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## awg

Aussiest said:


> The title of the thread is 'self managed super'. Thought perhaps that 'retirement fund' and 'super' were in effect the same thing, which they are in essence aren't they? Seeing as they are both aimed at saving for retirement.




No.

Superannuation is a tax beneficial environment governed by specific laws and regulations.

A "retirement fund" as you call it does not have those tax advantages, (or regulations and restrictions.)

I have always had a retirement plan that constitutes assets held within super and others outside, such as property acquired in my own and partners name.

I dont want to seem to condescending but if you are asking these questions, you are showing that you are either very young, and/or have no knowledge whatsoever about super.

You need to do some private research, huge resources available, check the ATO website.

The reason I have most of my assets in super is that my tax rate on that income is reduced from over 30% to  approx 4%....which makes a huge dif in return, over the years.


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## Aussiest

awg said:


> I dont want to seem to condescending but if you are asking these questions, you are showing that you are either very young, and/or have no knowledge whatsoever about super.
> 
> ...
> 
> The reason I have most of my assets in super is that my tax rate on that income is reduced from over 30% to  approx 4%....which makes a huge dif in return, over the years.




I'm not that young, i am a little naive when it comes to super though.

So, you're saying that the contributions that you make to super from your pre-tax income are only taxed at 4% rather than the usual 30%+? That's pretty good.

I'll have to work out what i'm doing. One house won't be enough, lol. 

But, thanks for your resources, will check them all out when i have time


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## awg

Aussiest said:


> I'm not that young, i am a little naive when it comes to super though.
> 
> So, you're saying that the contributions that you make to super from your pre-tax income are only taxed at 4% rather than the usual 30%+? That's pretty good.
> 
> I'll have to work out what i'm doing. One house won't be enough, lol.
> 
> But, thanks for your resources, will check them all out when i have time





My tax rate is because I draw a pension from Super fund.

If that income was derived from non-super assets, I would pay the full marginal tax rate, in my case 30%+

Due to the fact that super PENSION income is concessionaly taxed, after rebate, and deductible amount, in my case effective income tax rate is 4%.
( and no CGT )

If I was over 60, it would be 0%.

You CANNOT draw a pension, unless you have met a condition of release.

With regard to self-employed, there is concessions available..check the ATO website, ring them, and talk to yr accountant. 

When I endeavour to answer questions re Super, I find that I need to know how old the person is to give a sensible answer


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## ChilliBlue

Aussiest said:


> Could you save $30-40k, enough for a deposit on a property, buy the property and use the balance of the rent as your super contribution?
> 
> Assume i have stamp duty covered (add $15k to figures quoted above) and have found property which will give me a sensible return on my investment.
> 
> I'll research the tax benefits of super tomorrow.





You cannot reside in any property that is in the super fund


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## sinic

Hi AWG,

I think I might be in a similar position to you - and up to about 3 months ago I have been "trading" in my super fund (in pension mode) - so no tax.

However, as an experiment I opened a IB account outside the fund - because that can be mildly leveraged - and even if you do exactly the same thing -  you make double the profit so even if you pay 30% tax you are still ahead of the no-tax super deal.

But it is even better than that because you can do whatever you want - not worrying about whether the tax man is going to say whether you are trading or investing.  There seems to be a fine undefined line where they might complain about certain short term strategies.

Anyway my experiment shows better net reurns outside which is a bit of a bummer actually since I like the notion of zero tax.

Cheers,


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## awg

sinic said:


> Hi AWG,
> 
> I think I might be in a similar position to you - and up to about 3 months ago I have been "trading" in my super fund (in pension mode) - so no tax.
> 
> However, as an experiment I opened a IB account outside the fund - because that can be mildly leveraged - and even if you do exactly the same thing -  you make double the profit so even if you pay 30% tax you are still ahead of the no-tax super deal.
> 
> But it is even better than that because you can do whatever you want - not worrying about whether the tax man is going to say whether you are trading or investing.  There seems to be a fine undefined line where they might complain about certain short term strategies.
> 
> Anyway my experiment shows better net reurns outside which is a bit of a bummer actually since I like the notion of zero tax.
> 
> Cheers,





Hi sinic,

I'm glad to finally find someone else who is "trading" in Pension mode.

can you not open a CFD account within your Superfund?

My deeds permit this. 

I also have a GFT CFD account outside my super as well, as they have a good free permanent demo account, so you can continue to practice and refine strategies.

No CGT is the long-term benefit in super pension.

I may start a separate thread for Super Pension Strategies, to see if there are other ASFers doing things like this. 

One needs to be fairly cautious not to take positions that may result in "blow ups" especially if a substantial % of ones income is derived from the pension.

I have clarified to my satisfaction that at this time the ATO does not consider trading in SMSF to be a business.

I will have done only about 300 trades this fin yr anyway.

I dont really want to do much more than that, (at least until my skills are more fully developed) 

The ATO have audited cases of over 1000 trades pa, according to my administrator, with no issues. 

My situation has added complexities that I wont go into, but it does concern me that the Govt keep changing rules.

I NEVER agreed that 0% for over 60s was fair or sensible...it should be capped IMO

I know of several people with multi-millions in their super...and they pay NO income tax.

One guy has $30 million


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## lasty

Do you think there are many "professionals" who actively trade their super?

I know that brokerage would be important but what about the reporting.
Some reporting systems are daily
Others can be weekly, monthly or in some case the low cost models are yearly.
What would be a happy medium?


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## awg

lasty said:


> Do you think there are many "professionals" who actively trade their super?
> 
> I know that brokerage would be important but what about the reporting.
> Some reporting systems are daily
> Others can be weekly, monthly or in some case the low cost models are yearly.
> What would be a happy medium?






I am a bit confused about your reporting systems questions.

In my case I can tell you the value of my portfolio live online, as of this second. 

But not all on one integrated platform.

I have to look up the values on the platform of the INVESTMENT provider, not the SMSF admin, so open 3 screens instead of one.

If you choose an integrated SMSF platform, I had a close look at an independant SMSF provider. I think it was fully live, but your MINs are always a few days behind anyway. ( he was great, but a bit too expensive)

What platform does your $2200 provider offer, if you dont mind me asking.

The more details you provide, the better the answers you will get

It takes a LOT of money to develop a fully integrated on-line system, as I understand it.

someone has to pay

As to yr q about "professionals"...if you mean persons employed in the finance/investment area, the ones I have asked are to busy working to trade.

If you mean professional investors, I would like to know as well


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## lasty

Ok
The platform offering is unlimited trade reporting valued on daily basis.
All the other investments such as property,MINs are valued when available.
It includes setup,audit, tax return completed and lodged and bas statements etc as well as the full admin stuff.

The professionals im talking about are the ones who actively trade their SMSF or personal accounts.
They might not be looking for a daily update (valuation) in their super account. A weekly or monthly one will be suffice.
They just want cheaper brokerage.


I would have thought many on this forum would be fairly active players.


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## sinic

AWG,

I do about 500 trades a year mostly shares but some cfds - The cfds are done so that I am not leveraging or exposing the super fund to more exposure than could be done outright with shares anyway under the trust deed. (The ATO has a ruling on when and how a super fund can use cfds).
My records are all automated within excel and the auditor checks it off versus chess/contract notes and charges me about $1500.

I am not interested in long term cap gains - and it would be interesting to see the ATO challenge a super fund using short term tactics instead of losing heaps on "traditional buy and hold and collect dividends" strategy.  Afterall the prime purpose is to provide income for retirement - the investment strategy only has to state how this is going to be implemented.

Cheers,


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## awg

lasty said:


> Ok
> The platform offering is unlimited trade reporting valued on daily basis.
> All the other investments such as property,MINs are valued when available.
> It includes setup,audit, tax return completed and lodged and bas statements etc as well as the full admin stuff.
> 
> The professionals im talking about are the ones who actively trade their SMSF or personal accounts.
> They might not be looking for a daily update (valuation) in their super account. A weekly or monthly one will be suffice.
> They just want cheaper brokerage.
> 
> 
> I would have thought many on this forum would be fairly active players.





Hi again Lasty,

The platform I looked at, the way it worked was, the trades went via UBS, (I'm fairly sure)...cost was way more than commsec even

You had to ring the SMSF admin, and place the order by phone.

totally unsatisfactory for intra-day trades. ( I did over 80 of them this fin yr).

And they charged a % commission on yr total balance

I will be astonished if you can find someone that will let you use any broker of yr choice, the reason being, how will they integrate the information/data into their platform?...you are talking SERIOUS computer software..big $$

As you can tell from my posts, I would like to flush out some who are, as well..I have PM chat with 2 fellows with serious $ who was a sophisticated traders in SMSF, a while back tho

So there is at least 4 of us.

there are others on this forum that trade their SMSF from what they indicate, but not in Pension mode.

In the past, I have found most people with a lot of money, usually are fairly reticent to discuss things fully, especially on a public forum,( even given the cloak of anonymity.)

I am also of the view the vast majority of active participants on this board are under 55.

Big question for you...does the mob u r considering give fin or accounting advice thrown in as well, inclusive?

I did a fairly exhaustive search.

I eventually found a pay by the hour guy as well.. $250 p/h.


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## Ben L

Hi, can I set up a SMSF to purchase a business, and also be employed by the business and be paid? Thanks.


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## Prospector

Ben L said:


> Hi, can I set up a SMSF to purchase a business, and also be employed by the business and be paid? Thanks.



No.  SMSF are not allowed to be a business.


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## jono1887

where do you get the information on running a SMSF from?


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## awg

jono1887 said:


> where do you get the information on running a SMSF from?




http://www.ato.gov.au/superfunds/content.asp?doc=/content/00098951.htm&mnu=38107&mfp=001/007


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## jono1887

awg said:


> http://www.ato.gov.au/superfunds/content.asp?doc=/content/00098951.htm&mnu=38107&mfp=001/007




k, thanks


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## Ben L

Prospector said:


> No.  SMSF are not allowed to be a business.




I think you misunderstood what I was asking, I want to use mys SMSF to purchase a business as an Invesetment, the same way you purchase Real estate or shares. Where can I find what are permitable investments from?

thanks


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## Ben L

Just in regards to business. Isnt buying shares in a company the same thing? Except someone else is running it instead of myself? thanks

All i could find from the ATO was this

Make sure the SMSF complies with the sole purpose test at all times while the fund is in existence, including when investing fund assets and paying benefits upon retirement of members. 
Make sure you developed an investment strategy that you regularly review. 
Ensure your investment strategy takes into account the retirement goals of your members. 
Take into consideration the risks involved in certain investments. 
Take into consideration what bills your SMSF has to pay and allow enough cash to meet these expenses. 
Take into consideration when benefits will need to be paid. 
Consider diversifying your SMSF’s investments. 
Have a separate bank account for your SMSF and pay the expenses of your fund from that bank account only. 
Make sure that your fund’s ownership of its investments is assured. We prefer the assets to be in the names of all of the individual trustees as trustees for your fund, or in the case of a corporate trustee, in the name of the company as trustee for your fund.


 In certain states, legislation may prevent you from holding assets using your fund’s name. In this circumstance, a caveat, instrument or declaration of trust needs to be executed for the asset.



Make investment decisions that will provide for your retirement. 
Don’t invest without considering your strategy and your overall goals for retirement. 
Don’t mix your SMSF money with other money. 
Don’t have the assets of your SMSF in another entity’s name. 
Don’t provide financial assistance to members or relatives of members. 
Don’t make investments to help someone else out. If your SMSF buys art, generally you can not use it privately. 
Don’t buy wine as an SMSF investment and then drink it. 
Don’t buy jewellery as an SMSF investment and then wear it. 
Don’t use any of the assets of your SMSF for your own personal use or allow members or related parties to use those assets.


----------



## awg

Ben L said:


> I think you misunderstood what I was asking, I want to use mys SMSF to purchase a business as an Invesetment, the same way you purchase Real estate or shares. Where can I find what are permitable investments from?
> 
> thanks




hope this helps

http://www.atcbiz.com.au/self_managed_super_fund_smsf_articles.php?new=h2xdt2d175&num=&np=YES

As you can see, the answer is yes and no, depends on the circs.

get a binding written ruling from the ATO, before you do something, unless it is clear. ( I have done this about something else)

ring the ATO for a free chat first

Consult an accountant.

If yr fund is non-compliant, huge hassles later


----------



## Ben L

Thanks awg, some of it makes sense, but only 5% of total assets being 
in-house makes things tough. But i can see ways around it already. thanks


----------



## Sir Osisofliver

Arrgh.

Ok I know it's unusual to hear a FP be critical of super...but quite frankly *super is the worst investment in your future you can make. * It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype. Advertising like Bernie Fraser standing there and saying "In-dus-try su-per funds" like some freaking brainwashed zombie.

It's a horrible investment - and what's worse it's mandatory. If it wasn't mandatory I wouldn't have a cent in super personally, since I am forced to have super I have super as a SMSF - because then at least I can control the outcome to some extent. I can't borrow against my super, I can't touch it until I hit 55, (and when I do it will be drawn out faster than you can say transition to reirement).

If you really want to find the source of my annoyance google 2003 senate enquiry into superannuation by PriceWaterhouseCooper.  When the Govmint set up super they asked the insurance companies on how to set these things up. Of course when they then audited the things they found that the projections that the insurance companies used were way off.  and I mean way off and the govmint wanted to know why.  The response - we don't have enough in super to make it grow at a high enough rate. It's like giving a fox the keys to your chicken coop to look after them for you whilst you go away for the weekend.  When you get back and there are less chicken than you thought there should be the fox says, "well you didn't have enough to start with".  

The fees that get removed from that industry is just insane.


Let me give you an example.

I had a client recently that came to me who'd been done over so bad I couldn't believe it. Lets call her Georgie.  Georgie came to me after her investments were doing so badly in the GFC. When she went to a FP five years ago, he'd recommended that she put everything she had in super, which meant selling the three investment properties that her husband (who had passed on) and her had built up over the years and paid off, and drawing against the unused equity in the family home. Then transferring the money into super and placing half of the generated funds into  a "diversified portfolio of managed funds" and half into a large annuity.

Of course the annuity was paying her an income (and decreasing in size whilst doing so), the Managed funds were paying her an income (and underperforming the market for five years), and when the GFC came along two of her funds decided that they couldn't pay distributtions, and all of them went backwards, more than wiping out any gains she had made in the portfolio, and giving the poor dear stress because she was worried she couldn't pay her mortgage that the planner had recommended she get.

If she'd left it alone and not done a thing (which of course meant that the planner wouldn't have got his pound of flesh) she would have been so far ahead of where she is now and she wouldn't have a worry in the world.

Grrrr.


Cheers

Sir O


----------



## pilots

Sir Osisofliver said:


> Arrgh.
> 
> Ok I know it's unusual to hear a FP be critical of super...but quite frankly *super is the worst investment in your future you can make. * It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype. Advertising like Bernie Fraser standing there and saying "In-dus-try su-per funds" like some freaking brainwashed zombie.
> 
> It's a horrible investment - and what's worse it's mandatory. If it wasn't mandatory I wouldn't have a cent in super personally, since I am forced to have super I have super as a SMSF - because then at least I can control the outcome to some extent. I can't borrow against my super, I can't touch it until I hit 55, (and when I do it will be drawn out faster than you can say transition to reirement).
> 
> .
> If you really want to find the source of my annoyance google 2003 senate enquiry into superannuation by PriceWaterhouseCooper.  When the Govmint set up super they asked the insurance companies on how to set these things up. Of course when they then audited the things they found that the projections that the insurance companies used were way off.  and I mean way off and the govmint wanted to know why.  The response - we don't have enough in super to make it grow at a high enough rate. It's like giving a fox the keys to your chicken coop to look after them for you whilst you go away for the weekend.  When you get back and there are less chicken than you thought there should be the fox says, "well you didn't have enough to start with".
> 
> The fees that get removed from that industry is just insane.
> 
> 
> Let me give you an example.
> 
> I had a client recently that came to me who'd been done over so bad I couldn't believe it. Lets call her Georgie.  Georgie came to me after her investments were doing so badly in the GFC. When she went to a FP five years ago, he'd recommended that she put everything she had in super, which meant selling the three investment properties that her husband (who had passed on) and her had built up over the years and paid off, and drawing against the unused equity in the family home. Then transferring the money into super and placing half of the generated funds into  a "diversified portfolio of managed funds" and half into a large annuity.
> 
> Of course the annuity was paying her an income (and decreasing in size whilst doing so), the Managed funds were paying her an income (and underperforming the market for five years), and when the GFC came along two of her funds decided that they couldn't pay distributtions, and all of them went backwards, more than wiping out any gains she had made in the portfolio, and giving the poor dear stress because she was worried she couldn't pay her mortgage that the planner had recommended she get.
> 
> If she'd left it alone and not done a thing (which of course meant that the planner wouldn't have got his pound of flesh) she would have been so far ahead of where she is now and she wouldn't have a worry in the world.
> 
> Grrrr.
> 
> 
> Cheers
> 
> Sir O




Every FP will always tell you what makes him the most money, he would be a fool to tell you any other thing, all PF are ONLY SALES PEOPLE, no different to a car sales man.


----------



## Prospector

:topic
But you know Sir Osisofliver, it was only the other day that I realised what your name meant! 

I agree with what you say, but what you are describing is bad financial advice and planning and really has nothing to do with super as such.  We had an adviser several years ago who had advised a similar approach and borrowing to gear heavily into shares.  We were not happy with the level of debt he was advising, so we didnt pursue it.  So it But apart from this year, our SMSF has been a great investment vehicle for us.  Just not the way he wanted us to do it.  We bought some land instead through the super fund.


----------



## Julia

I agree with Prospector's comments, Sir O.  I'm really happy with my SMSF.

However, I'm not so wise about what Sir O's nic means.  Can someone explain it?
(I feel a bit like Pauline Hanson.)


----------



## Prospector

Julia said:


> I agree with Prospector's comments, Sir O.  I'm really happy with my SMSF.
> 
> However, I'm not so wise about what Sir O's nic means.  Can someone explain it?
> (I feel a bit like Pauline Hanson.)




cirrhosis of liver!


----------



## Sir Osisofliver

Prospector said:


> cirrhosis of liver!




Why do think I always sign off...

"Cheers"

Sir O


----------



## Sir Osisofliver

Prospector said:


> :topic
> But you know Sir Osisofliver, it was only the other day that I realised what your name meant!
> 
> I agree with what you say, but what you are describing is bad financial advice and planning and really has nothing to do with super as such.  We had an adviser several years ago who had advised a similar approach and borrowing to gear heavily into shares.  We were not happy with the level of debt he was advising, so we didnt pursue it.  So it But apart from this year, our SMSF has been a great investment vehicle for us.  Just not the way he wanted us to do it.  We bought some land instead through the super fund.




Seriously Prospector - go google the Senate Enquiry - and remember this applies to everyone without a SMSF. You might also have some fun if you looked up some law case files about certain breaches of superannuation legislation in relation to fees by some of the largest and well known companies in Australia who paid jointly a whopping 1.2 Billion dollars in Fines to the Australian govmint....and shrugged it off as they were making triple that by continuing what they were doing.

makes me want to barf.

Cheers

Sir O


----------



## Prospector

Sir Osisofliver said:


> Seriously Prospector - go google the Senate Enquiry - and remember this applies to everyone without a SMSF. You might also have some fun if you looked up some law case files about certain breaches of superannuation legislation in relation to fees by some of the largest and well known companies in Australia who paid jointly a whopping 1.2 Billion dollars in Fines to the Australian govmint....and shrugged it off as they were making triple that by continuing what they were doing.
> 
> makes me want to barf.
> 
> Cheers
> 
> Sir O




But isnt this exactly why an SMSF is good, providing you can get good financial advice?

I use cheers a lot too btw!  Seems to be a twenty thing to do, have copied it from my kids!


----------



## Sir Osisofliver

Prospector said:


> But isnt this exactly why an SMSF is good, providing you can get good financial advice?




Well the fact that it is under your control is a great thing.....but answer me this Prospector...which do you think will give you a better level of return.

a) A portfolio of stocks and property held in your SMSF or

b) The same portfolio of stocks and property that uses a safe and appropriate level of leverage to optimise your returns over the longer term.

Of course the answer is B.  Since we are dealing with longer time frames when we deal with super and retirement, the inability to use safe structured leveraged products is a major negativity for using Superannuation as an investment vehicle which the "tax benefits" associated with super do not make up for. 







> I use cheers a lot too btw!  Seems to be a twenty thing to do, have copied it from my kids!




Hey I'm down with the kids Prospector.   (although I must admit this current hairstyle of every teenage boy I see at present makes me laugh. They look like a cross between a fuzzy toilet brush and a Minimoy from Arthur and the Invisibles.

Cheers

Sir O


----------



## Prospector

Sir Osisofliver said:


> Of course the answer is B.
> Hey I'm down with the kids Prospector.   (although I must admit this current hairstyle of every teenage boy I see at present makes me laugh. They look like a cross between a fuzzy toilet brush and a Minimoy from Arthur and the Invisibles.
> 
> Cheers
> 
> Sir O




Ok, I see the point you are making now cirrhosis.  

The hair - Bed hair, my friend!  You can even buy products called 'bed hair look' 

Cheers


----------



## jono1887

The rules are there to protect the majority of the population. Just look at the number of stories that have come out about people that have been advised to leverage heavily against their homes and have now lost everything in the GFC. The thing is, the majority of the pop is highly uneducated in dealing with finances and allowing super fund managers to leverage against their super may result in even more risky investments which would probably set them back in the long run rather than benefit the everyday member of society.

just my


----------



## Julia

Sir Osisofliver said:


> Arrgh.
> 
> Ok I know it's unusual to hear a FP be critical of super...but quite frankly *super is the worst investment in your future you can make. * It brings me to tears that the majority of people think that superannuation is wonderful - because it means that they are believing the hype.



So would it be your preference for the compulsory contributions to Super to be abolished, Sir O?
If that were to happen, how likely do you think it is that the average Australian would do anything about providing for their own retirement?

You know many people simply won't.  So what other system can you suggest to ensure the provision of retirement income does not fall on the taxpayer, who is already providing more than they should in pensions for those who have failed to save.


----------



## Sir Osisofliver

Julia said:


> So would it be your preference for the compulsory contributions to Super to be abolished, Sir O?
> 
> If that were to happen, how likely do you think it is that the average Australian would do anything about providing for their own retirement?




Not that I think my preferences would ever be taken into account Julia... but quite simply...no. However the current system could use a lot of changes.  Its too inflexible, and far too much under the power of the legislators and advisers to whichever government is in power.  I mean this is our money right? Garnished from our salary for our future and yet the amount of control that most people have over it is minimal to non existent. 

Some will argue that the government _need_ to have control because they are dealing with macro effects, with the "Big Picture" but I disagree.  One of the things I read about recently was that a potential change being considered is to make further limitations to the ability to draw your super as a lump sum...because the average australian draws it, spends it, and they are then sucking on the public funded teat. There has even been discussion that the government should make it mandatory that all super funds (and this would apply to your smsf as well) at pension phase invest a minimum 50% into an annuity stream investment.  An Annuity FFS!! You put half a million into an annuity to last you twenty years and what is left at the end?  Nada Zilch diddly, bubkiss.  You put a half  million into property for twenty years or a share portfolio and it will provide you with an income, increase in value and still be there at the end of twenty years!!

Why is this being discussed? Because you are right Julia, the average Australian wouldn't do anything to provide for their financial future.  Remember that bit in one of the first posts in Newbie lessons.  Only 8% of people ever retire comfortably.  That number is probably not going to change in a hurry.







> You know many people simply won't.  So what other system can you suggest to ensure the provision of retirement income does not fall on the taxpayer, who is already providing more than they should in pensions for those who have failed to save.





Well I hate to sound like a broken record Julia, but I truly think that education is the key. I'd love it if even ten per cent of the budget currently spent on advertising superannuation and financial products and packaging were used to actually teach people..FOR FREE...the things they need to know for their financial security.

I'd also like to see some flexibility and level of control way in excess of the current system. Given our nanny state mentality however... I seriously doubt I'll get any of those things.

My two cents

Cheers

Sir O


----------



## Julia

I completely agree with what you say, Sir O, except that I'm not sure that more education would make much difference.   I've noticed that quite an astonishing number of people simply don't want to think about retirement and the funding thereof in much the same way as they don't want to think about death and making a Will, having a POA etc.

Don't know whether it's part of the Australian "she'll be right" attitude or whether it's more universal.

I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff.  Just don't want to think about it.  

And there's also that large chunk of the population who - if they think about it at all - consider that the government pension will do them just fine.  After all, they've paid their taxes, haven't they?  So the gummint will look after them when they're old.


----------



## Mr J

> I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff. Just don't want to think about it.




It's amazing isn't it. People as a whole spend so much time earning their money, and very little putting it to good use.


----------



## Prospector

You raise a good point Jono.  Our system is geared towards the lowest common denominator, in order to protect the less educated/able/well informed.  We do need a super system to protect those, but in the mix of all that, those who could manage their own affairs better are lumped into the same system.

On the other hand, a lot of experts are now spectacularly bankrupt.


----------



## Sir Osisofliver

Julia said:


> I completely agree with what you say, Sir O, except that I'm not sure that more education would make much difference.   I've noticed that quite an astonishing number of people simply don't want to think about retirement and the funding thereof in much the same way as they don't want to think about death and making a Will, having a POA etc.
> 
> Don't know whether it's part of the Australian "she'll be right" attitude or whether it's more universal.
> 
> I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff.  Just don't want to think about it.
> 
> And there's also that large chunk of the population who - if they think about it at all - consider that the government pension will do them just fine.  After all, they've paid their taxes, haven't they?  So the gummint will look after them when they're old.




So lets have some of those adverts like they do for the smokers.  Show Grandad and Grandma Grey nomadding around the country in a tricked out camper--->these people thought about their financial future

Show Grandad with fleas running through his beard eating cold baked beans straight from the tin.  ----> he didn't plan for his future and can barely scrape though.

Please go along to your *free* information seminar with Sir O and learn for yourself how to be financially secure.

Lets get some shock tactics like they use to educate people not to drink and drive, smoke, take drugs _*or any other destructive behaviour*_. 

Of course I'm dreaming aren't I...it's much more fun (and profitable for the large corporations) to keep the sheeple dependent upon you.

Cheers

Sir O


----------



## jono1887

Sir Osisofliver said:


> So lets have some of those adverts like they do for the smokers.  Show Grandad and Grandma Grey nomadding around the country in a tricked out camper--->these people thought about their financial future
> 
> Show Grandad with fleas running through his beard eating cold baked beans straight from the tin.  ----> he didn't plan for his future and can barely scrape though.
> 
> Please go along to your *free* information seminar with Sir O and learn for yourself how to be financially secure.
> 
> Lets get some shock tactics like they use to educate people not to drink and drive, smoke, take drugs _*or any other destructive behaviour*_.
> 
> Of course I'm dreaming aren't I...it's much more fun (and profitable for the large corporations) to keep the sheeple dependent upon you.
> 
> Cheers
> 
> Sir O




Studies have shown that these shock tactics don't actually work too well... they havnt been effective in reducing smoking or alcohol in society, ever!

Education would be a good idea, but I would still doubt the capacity of most individuals to understand the bulk of the things behind investment, and how super actually works. Besides, the super firms makes things way to difficult to understand anyway... like cash investments arent actually 100% cash investments  

Perhaps a better solution would be implementing this education into the high school curriculum, instead of learning polynomials and integration in senior mathematics, perhaps some basic education into finances and investment would be a better options.

My high school education is essentially useless in the real world. Sure engineers and the like would need the knowledge of how to integrate ect ect, but what the heck am I going to use those skill now? IMO a more practical education in school would be the most efficient thing to do...


----------



## Sir Osisofliver

jono1887 said:


> Studies have shown that these shock tactics don't actually work too well... they havnt been effective in reducing smoking or alcohol in society, ever!
> 
> Education would be a good idea, but I would still doubt the capacity of most individuals to understand the bulk of the things behind investment, and how super actually works. Besides, the super firms makes things way to difficult to understand anyway... like cash investments arent actually 100% cash investments
> 
> Perhaps a better solution would be implementing this education into the high school curriculum, instead of learning polynomials and integration in senior mathematics, perhaps some basic education into finances and investment would be a better options.
> 
> My high school education is essentially useless in the real world. Sure engineers and the like would need the knowledge of how to integrate ect ect, but what the heck am I going to use those skill now? IMO a more practical education in school would be the most efficient thing to do...





Actually I've said that before it should be taught in high schools, but (and I think it was Julia) said that we already place too much demand upon our teachers to raise our kids (and I don't disagree).  

I have actually given a couple of talks at my daughters school - stuff for teens so that they can understand this sort of stuff and I had the teachers coming up to me saying "I never knew that".

I spend a fair bit of time doing presentations and I have certainly heard the comment "Why don't they teach this at school" before.

Oh well, still think education rather than nanny state BS is the way to go.

Cheers

Sir O


----------



## Julia

I'm part of a mentoring programme in the local schools and we're currently discussing including a 'basic financial management' option for probably first year high school students, so it's good to have this idea endorsed.


----------



## Sir Osisofliver

Julia said:


> I'm part of a mentoring programme in the local schools and we're currently discussing including a 'basic financial management' option for probably first year high school students, so it's good to have this idea endorsed.




What topics are you planning to teach?

Sir O


----------



## jono1887

Sir Osisofliver said:


> Actually I've said that before it should be taught in high schools, but (and I think it was Julia) said that we already place too much demand upon our teachers to raise our kids (and I don't disagree).
> Sir O




Let the ignorant do the teaching?? The problem lies in that the current generations as previously discussed are both ignorant and uneducated in the matter of finances. So how are they going to go about teaching their children in the first place??


----------



## Julia

Sir Osisofliver said:


> What topics are you planning to teach?
> 
> Sir O



Planning and Budgeting - goals/saving and spending/money planning

Getting Started - opening an account, everyday banking, different ways to pay

Understanding Paperwork, including statements, bills etc, record keeping

Credit Providers, credit and credit cards, loans

Dealing with Debt

Rights and Responsibilities

Any further suggestions are welcome.


----------



## Sir Osisofliver

jono1887 said:


> Let the ignorant do the teaching?? The problem lies in that the current generations as previously discussed are both ignorant and uneducated in the matter of finances. So how are they going to go about teaching their children in the first place??




Jono...ever hear of teacher resources?  How about textbooks? Slides?  Presentation materials? Video's?  Webinars? Practical examples?

Nah you're right they wouldn't be useful at all.

Cheers

Sir O


----------



## Sir Osisofliver

Julia said:


> Planning and Budgeting - goals/saving and spending/money planning
> 
> Getting Started - opening an account, everyday banking, different ways to pay
> 
> Understanding Paperwork, including statements, bills etc, record keeping
> 
> Credit Providers, credit and credit cards, loans
> 
> Dealing with Debt
> 
> Rights and Responsibilities
> 
> Any further suggestions are welcome.




I'd go debt v liability rather than just debt - they are two different things

appreciation versus depreciation - As in when you buy are car....and when you buy a house.

cyclical nature of the economy

maybe a little risk management strategy.

Cheers

Sir O


----------



## Prospector

My son had a brilliant accounting teacher in year 11 and 12.  This guy was apparently extremely wealthy, through multiple investments he had made, mind you, he wasnt married or had children either (maybe there is a lesson to that!) so he didnt have to work at all.  But he loved teaching and wanted to share the knowledge.  He was also a little strange though, I think he heard voices!

Debt?  I'd say, having good debt rather than bad debt.


----------



## Sir Osisofliver

Prospector said:


> Debt?  I'd say, having good debt rather than bad debt.




You've been listening to Miyasaki too much.

One is debt...and one is liability.

We are conditioned from a young age to avoid "debt" in all it's forms. Debt is bad..ooo scary debt. Liability is different.

Cheers
Sir O


----------



## Julia

Sir Osisofliver said:


> I'd go debt v liability rather than just debt - they are two different things
> 
> appreciation versus depreciation - As in when you buy are car....and when you buy a house.
> 
> cyclical nature of the economy
> 
> maybe a little risk management strategy.
> 
> Cheers
> 
> Sir O



Good suggestions, thank you, if there turns out to be time.  If it happens at all (and that's far from certain given a rather indifferent response so far) it will be maybe five x 45 minute workshops.

If we can just get these kids to understand basic budgeting we will be doing something useful!


----------



## awg

Hi Julia,

The one thing that stands out from my earliest financial learning is

" the power of compound interest"

I've got an idea it might even be a Norman V Peale book

It was shown to me and you dont need to overly complicate it by talk of inflation and tax.

to a young mind, just the results of saving 10% and allowing Compound interest to take effect, the numbers are impressive.

and so are the results, especially if applied to dividend producing stock

I did this in my early years, and while it was only one outcome, if if I had not
done so, could not have achieved financially what I have ( near independance)

I know it will sound terribly crude to ASF members, but remember most will never be that literate.

KISS

saw a story on Landline about a 94yr old farmer, an original Westfarmers stock holder, always reinvested divs, worked hard and live simply, his WES stock was worth $19m


----------



## robots

awg said:


> Hi Julia,
> 
> The one thing that stands out from my earliest financial learning is
> 
> " the power of compound interest"
> 
> I've got an idea it might even be a Norman V Peale book
> 
> It was shown to me and you dont need to overly complicate it by talk of inflation and tax.
> 
> to a young mind, just the results of saving 10% and allowing Compound interest to take effect, the numbers are impressive.
> 
> and so are the results, especially if applied to dividend producing stock
> 
> I did this in my early years, and while it was only one outcome, if if I had not
> done so, could not have achieved financially what I have ( near independance)
> 
> I know it will sound terribly crude to ASF members, but remember most will never be that literate.
> 
> KISS
> 
> saw a story on Landline about a 94yr old farmer, an original Westfarmers stock holder, always reinvested divs, worked hard and live simply, his WES stock was worth $19m




hello,

spot on awg, combined with living within your means, getting a good income and presto life is grand

thankyou
associate professor robots


----------



## Julia

Thanks, awg.  Yes, compound interest is like magic if you start young.


----------



## Onlooker

Just discovered this SMSF forum and will visit it regularly as it seems to discuss the things I am interested in.  As for "The Power of Compound Interest" (by Norman Vincent Peale - nice one , there is the very simple Rule of 72:  divide the rate of interest you receive into 72 to give you the number of years it would take to double your money.  7% interest?  You double your money in a little over 10 years!

Always assuming that you want to self-manage your super (and I know that far too many people want to delegate all that responsibility), and further assuming that you can get a no-frill SMSF reporting and audit service (which is mandatory) for around $1,000 or less, and that an industry fund charges 1% of your account balance, then a super account with a balance of $100,000 would cost you no more to administer as a SMSF.  It would require some more involvement on your part but it would also give you a lot more discretion to decide how your super savings are invested.   

If I were still in the workforce and on a high salary which would mean that my employer would have to pay 9% of my gross salary into a fund every month, I would definitely set up my own SMSF and have them pay their contribution into it rather than some industry fund over which I have absolutely no control.

Administering your own SMSF is not rocket science!  Yes, you need to read up on a few things but there is plenty of literature (including "Superannuation for Dummies"


----------



## jono1887

Onlooker said:


> Administering your own SMSF is not rocket science!  Yes, you need to read up on a few things but there is plenty of literature (including "Superannuation for Dummies"




It can be quite difficult and perhaps its not for all people who arent financially literate... but then again, many of them are just financially ignorant :


----------



## lasty

jono1887 said:


> It can be quite difficult and perhaps its not for all people who arent financially literate... but then again, many of them are just financially ignorant :




Administering your own super is complexed and dangerous.Its best to get professional help rather than getting an intrusive call from the ATO.

It reminds me of the the DIY homebuilder who attempts to build an extension of their home only to find out through failure professional help is required and the cost has doubled because of the undoing of the DIY persons efforts.


----------



## BlackPanther

Hi all,

Older thread but didn't want to get flamed for starting another, you know. 

I have a basic setup of SMSF question.

The Deed, ABN and TFN done, however when the ABN and TFN came back from ATO, they are in the name of 'The Trustee for Joe Bloggs Super Fund'.

Am i correct in thinking that I would think that one would then register a trading name under that entity with the original name of 'Joe Bloggs Super Fund'?

Thanks in advance.


----------



## Julia

I'm not sure what you mean by 'register a trading name'?

Do you mean what name you use in opening an account with an online broker?

Mine is called "The  (my own name) Super Fund but on different documentation it appears differently, i.e. sometimes quoting the names of both trustees, sometimes "The Trustees, ......Super Fund", sometimes my own name, then the name of the fund, etc etc.

Might be good to ask whoever drew up the Deed etc for you.


----------



## BlackPanther

Thanks for your reply Julia.

When I say a 'Trading Name', I mean a business name registered with the State authority for such, Dept of Justice Vic in my case, then register another ABN for that name, thus keeping the paperwork and accounts and such neat - in one name you know.

But if yours are in various names, then I guess all is ok.

I have sent an email but waiting for a reply so though i'd ask somebody that is already doing it as such.  Learn from experience, you know.

Thanks again.

(You know - Should stop listening to and quoting teenage daughter - you know!!)


----------



## Rich

I agree, have to say I have recently moved from the UK to Australia and although I have had a great career and made some money, I've always just blanked saving for retirement.  Coming to Australia was a relief to see the compulsory savings, and I soon got into the knack.  Although I'm a little worried about what changes will be made over the 20 years when I want to retire.

I actually used a Newcastle Accountants and financial advisor Leenane Templeton who sorted all my worries about SMSF they are 'The Self Managed Super Specialists' at least I feel I am in control of my future now and they gave me a good insight into all areas.   Well done Australia, I think you're on the right track. 

Richard


----------



## Rich

Sure...  I'm not sure whether you can post web addresses on here but there's was www.leenanetempleton.com.au/smsf  they cover Sydney to Brisbane area.

Good Luck

Cheers

Richard


----------



## Investor82

BlackPanther said:


> Hi all,
> 
> Older thread but didn't want to get flamed for starting another, you know.
> 
> I have a basic setup of SMSF question.
> 
> The Deed, ABN and TFN done, however when the ABN and TFN came back from ATO, they are in the name of 'The Trustee for Joe Bloggs Super Fund'.
> 
> Am i correct in thinking that I would think that one would then register a trading name under that entity with the original name of 'Joe Bloggs Super Fund'?
> 
> Thanks in advance.




Your super fund cannot operate as its own 'entity' as such (without a trustee). It is a little bit confusing. 
A trust is not recognised under some australian laws (ie property) however is recognised by different laws (ie tax). So a trust cannot own assets - however a trustee can own a property IN trust for a trust.  
Being recognised by the tax laws, means that a trust can earn income and hence pay tax!

So in response to your question the LEGAL name of your trust would be "Joe Blogs as trustee for The Joe Blogs Trust" a trading name is optional (and not normally required for SMSF). In which case it would be "Joe Blogs as trustee for the Joe Blogs Trust -  trading as Joe Blogs Investments" 

All legal documents (ATO, Bank statements etc) will show the trusts legal name. 

have I confused you yet?


----------



## Investor82

Can anyone answer this for me though?

Is it possible to purchase a Property through your SMSF, then rent the property (to yourself) and pay rent. 
If you can, you could not claim the rent as contributions, however if there was a mortgage on the property (which a SMSF can now do) you could claim the gap betweeen rental payments and mortgage payments. It would be theoretical to own your own home and recieve tax benifits from it. 

It sounds too good to be possible, and there are plenty of smarter ppl than me, so Im sure Im not the first one to think this way - therefore I am guessing that the tax dept would have closed the loophole already. 

Does anyone actually know?


----------



## lasty

Investor82 said:


> Can anyone answer this for me though?
> 
> Is it possible to purchase a Property through your SMSF, then rent the property (to yourself) and pay rent.
> If you can, you could not claim the rent as contributions, however if there was a mortgage on the property (which a SMSF can now do) you could claim the gap betweeen rental payments and mortgage payments. It would be theoretical to own your own home and recieve tax benifits from it.
> 
> It sounds too good to be possible, and there are plenty of smarter ppl than me, so Im sure Im not the first one to think this way - therefore I am guessing that the tax dept would have closed the loophole already.
> 
> Does anyone actually know?




simple answer no


----------



## gooner

Investor82 said:


> Can anyone answer this for me though?
> 
> Is it possible to purchase a Property through your SMSF, then rent the property (to yourself) and pay rent.
> If you can, you could not claim the rent as contributions, however if there was a mortgage on the property (which a SMSF can now do) you could claim the gap betweeen rental payments and mortgage payments. It would be theoretical to own your own home and recieve tax benifits from it.
> 
> It sounds too good to be possible, and there are plenty of smarter ppl than me, so Im sure Im not the first one to think this way - therefore I am guessing that the tax dept would have closed the loophole already.
> 
> Does anyone actually know?




Yes you can purchase a property through your SMSF and then rent the property to yourself and pay rent. However, the value of the asset must be less than 5% of the total assets of the fund, as it would be categorised as an in-house asset.

As to the gap between rent and mortgage payments, if you borrow against the property, then you need a separate trust or entity arrangement for the property to isolate borrowing risk from other assets. As a result, I doubt that any tax losses will be offset against other income in the SMSF, although not a tax expert so not sure on this bit. Also, if you sell the property before retirement you will have to pay tax on it which you would not pay if you owned outright. Also if you can claim any losses, the tax saving is only at 15%.

So not worth doing IMHO


----------



## brianwh

Could anyone direct me to a website which gives recent (say last 3 months) benchmark figures for different types of funds - balanced, growth etc. When I was involved with an FP he used to give me a sheet from UBS headed "Investment Funds Performance" which gave figures for the varoius UBS funds and a benchmark figure (which I assumed was an average across the industry) for the most recent 1 month, 3 months, 6 months and so on. I no longer have a relationship with this FP and my Google seems not up to the task of finding this sheet.

Thanks


----------



## lasty

brianwh said:


> Could anyone direct me to a website which gives recent (say last 3 months) benchmark figures for different types of funds - balanced, growth etc. When I was involved with an FP he used to give me a sheet from UBS headed "Investment Funds Performance" which gave figures for the varoius UBS funds and a benchmark figure (which I assumed was an average across the industry) for the most recent 1 month, 3 months, 6 months and so on. I no longer have a relationship with this FP and my Google seems not up to the task of finding this sheet.
> 
> Thanks




The simple answer is there no actual classification of balance or growth funds.
It really is determined by the funds classification and what it perceives itself.

So what you can do however is look at the ASX200 benchmark for Australian shares or a MSCI index for international shares.

What a benchmark does is a justification of fees or funds marketing against their competitor.
I suggest you get away from that and start looking at what you want to acheive for a goal.
FP will always  benchmark you. If you are losing money but ahead of the benchmark does that make you feel good?
We arent talking about HSC here.Its your money so look after it.


----------



## brianwh

I understand what you are saying lasty but comparing to a benchmark would (hopefully) give some assurance or confirmation that I was on the right track with my strategy. If I was to find myself drifting too far outside what they were showing, I would need to do a rethink.


----------



## vincent191

Investor82 said:


> Can anyone answer this for me though?
> 
> Is it possible to purchase a Property through your SMSF, then rent the property (to yourself) and pay rent.
> If you can, you could not claim the rent as contributions, however if there was a mortgage on the property (which a SMSF can now do) you could claim the gap betweeen rental payments and mortgage payments. It would be theoretical to own your own home and recieve tax benifits from it.
> 
> It sounds too good to be possible, and there are plenty of smarter ppl than me, so Im sure Im not the first one to think this way - therefore I am guessing that the tax dept would have closed the loophole already.
> 
> Does anyone actually know?




I agree with the other two comments. You have to be extra careful with anything transaction that is not at arm's length.

Tainted transactions like the one you suggested have to be approached very careful.....seek professional advise.


----------



## awg

brianwh said:


> Could anyone direct me to a website which gives recent (say last 3 months) benchmark figures for different types of funds - balanced, growth etc. When I was involved with an FP he used to give me a sheet from UBS headed "Investment Funds Performance" which gave figures for the varoius UBS funds and a benchmark figure (which I assumed was an average across the industry) for the most recent 1 month, 3 months, 6 months and so on. I no longer have a relationship with this FP and my Google seems not up to the task of finding this sheet.
> 
> Thanks




sorry, dont have time to do all your homework atm, but with UBS, enter the code into Google and that will give you the figures for that fund..ie UBS0001au  UBS0002au  etc

Go to the UBS site for all the codes.

Various sites such as Morningstar give info, as does SMH and Fin review.

I personally think benchmarking is worthwhile, for several reasons.

Deciding what to benchmark against can be tricky.

In my case the bulk of my investment assets are in an "assertive" SMSF pension.

If I outperform most, or all of those after tax, then that is a qualified success.

Sure it is great to never lose money, but the percentage of investors who managed that during the GFC would be relatively small.

Its a fairly simple thing to do, so long as you take snapshots of yr complete portfolio on the appropriate dates, and use Excel, it takes 5 minutes, you can benchmark to yr hearts content. Fin Review is easy


----------



## gooner

awg said:


> sorry, dont have time to do all your homework atm, but with UBS, enter the code into Google and that will give you the figures for that fund..ie UBS0001au  UBS0002au  etc
> 
> Go to the UBS site for all the codes.
> 
> Various sites such as Morningstar give info, as does SMH and Fin review.
> 
> I personally think benchmarking is worthwhile, for several reasons.
> 
> Deciding what to benchmark against can be tricky.
> 
> In my case the bulk of my investment assets are in an "assertive" SMSF pension.
> 
> If I outperform most, or all of those after tax, then that is a qualified success.
> 
> Sure it is great to never lose money, but the percentage of investors who managed that during the GFC would be relatively small.
> 
> Its a fairly simple thing to do, so long as you take snapshots of yr complete portfolio on the appropriate dates, and use Excel, it takes 5 minutes, you can benchmark to yr hearts content. Fin Review is easy




IMO, accumulation indexes (in AFR) are best as this includes total returns including dividends.  Using non accumulation indexes is prone to error if your portfolio dividend yield does not match the index yield.


----------



## awg

gooner said:


> IMO, accumulation indexes (in AFR) are best as this includes total returns including dividends.  Using non accumulation indexes is prone to error if your portfolio dividend yield does not match the index yield.




Agree, in the instance of Index benchmarks.

However, I think the returns shown for Managed Super funds is inclusive of dividends?


----------



## Duckman#72

gooner said:


> Yes you can purchase a property through your SMSF and then rent the property to yourself and pay rent. However, the value of the asset must be less than 5% of the total assets of the fund, as it would be categorised as an in-house asset.




This is obviously for a residential property. Obviously it is going to be extremely difficult to meet the 5% rule. As a general rule - a member cannot have the use of the asset. 

You can purchase a commercial property however, and rent it back. Not a problem.

Duckman


----------



## gooner

awg said:


> Agree, in the instance of Index benchmarks.
> 
> However, I think the returns shown for Managed Super funds is inclusive of dividends?




awg

Yes super fund returns include dividends. But note that returns are on a pre-tax basis usually so do not reflect CGT, franking etc. By having low turnover in a SMSF and focussing on franked dividends, you can enhance return significantly


----------



## awg

gooner said:


> awg
> 
> Yes super fund returns include dividends. But note that returns are on a pre-tax basis usually so do not reflect CGT, franking etc. By having low turnover in a SMSF and focussing on franked dividends, you can enhance return significantly




Glad you raised this point.

This is one reason I set up my own SMSF pension, when my funds were previously "financially managed", I enquired by what, if any mechanism, a managed fund differeniated between a 0% pension, 15% super, or any other tax rate.

My "financial advisor" continued to propogate various answers to the effect that Wrap funds did do this. I did not believe him.

My belief is that tax is paid at the MIN level, and that effectively cross-susidises all individual tax levels. I could be wrong, as I could never get an comprehensible explanation from anyone I asked.

I have contended this many times, but if you are fully credited dividend imputation, then that increases your long term returns somewhat, can be as high as 1%pa! 

The only way to ensure you get those credits is to select and directly own high franked issues.

Some sneeze at this, but as I am expected to live nearly 30 more years, it could be a very substantial sum for my heirs, and I would certainly prefer they or myself have it than to see it shared around.:


----------



## gooner

awg said:


> Glad you raised this point.
> 
> This is one reason I set up my own SMSF pension, when my funds were previously "financially managed", I enquired by what, if any mechanism, a managed fund differeniated between a 0% pension, 15% super, or any other tax rate.
> 
> My "financial advisor" continued to propogate various answers to the effect that Wrap funds did do this. I did not believe him.
> 
> My belief is that tax is paid at the MIN level, and that effectively cross-susidises all individual tax levels. I could be wrong, as I could never get an comprehensible explanation from anyone I asked.
> 
> I have contended this many times, but if you are fully credited dividend imputation, then that increases your long term returns somewhat, can be as high as 1%pa!
> 
> The only way to ensure you get those credits is to select and directly own high franked issues.
> 
> Some sneeze at this, but as I am expected to live nearly 30 more years, it could be a very substantial sum for my heirs, and I would certainly prefer they or myself have it than to see it shared around.:




awg

Completely agree. This is why I do not have any overseas shares in my portfolio. I believe the franking benefit provides a competitive edge to my portfolio compared to holding overseas shares, as effectively you receive pre-tax profits of companies rather than after tax profits. Although, I do hold CSL which pays unfranked as it's business is overseas - just gave me good health exposure so could not go past it.


----------



## awg

gooner said:


> awg
> 
> Completely agree. This is why I do not have any overseas shares in my portfolio. I believe the franking benefit provides a competitive edge to my portfolio compared to holding overseas shares, as effectively you receive pre-tax profits of companies rather than after tax profits. Although, I do hold CSL which pays unfranked as it's business is overseas - just gave me good health exposure so could not go past it.





I do hold many non-div stocks as well.

CGT does not apply to me either, so that effects my strategy 

If one wishes to get specific OS exposure in SMSF, very easy to do now with newer ETFs


----------



## Julia

Brian, I understand that you want the reassurance of feeling your own choices are resulting in a performance which stands up to measurement against some benchmark, but I really can't see why this is necessary.

If you simply work out how much income you need to live on, how much more you want to grow your capital over that to cover inflation etc, and then build your p/f accordingly, why does it need to match any public benchmark?

e.g. you may (according to your level of capital invested) easily outperform a managed fund average/index/whatever, or you may underperform it, but as long as you're producing a result which works for you, why should it matter?


----------



## nulla nulla

awg said:


> Glad you raised this point.
> 
> This is one reason I set up my own SMSF pension, when my funds were previously "financially managed", I enquired by what, if any mechanism, a managed fund differeniated between a 0% pension, 15% super, or any other tax rate.
> 
> My "financial advisor" continued to propogate various answers to the effect that Wrap funds did do this. I did not believe him.
> 
> My belief is that tax is paid at the MIN level, and that effectively cross-susidises all individual tax levels. I could be wrong, as I could never get an comprehensible explanation from anyone I asked.
> 
> I have contended this many times, but if you are fully credited dividend imputation, then that increases your long term returns somewhat, can be as high as 1%pa!
> 
> The only way to ensure you get those credits is to select and directly own high franked issues.
> 
> Some sneeze at this, but as I am expected to live nearly 30 more years, it could be a very substantial sum for my heirs, and I would certainly prefer they or myself have it than to see it shared around.:




If you haven't already done so, I recommend you discuss with your accountant what happens to your component of the SMSF in the event of your demise. It may pay to put it place now, contingency plans to ensure your component is distributed amongst your heirs in the manner you want.


----------



## gooner

Julia said:


> Brian, I understand that you want the reassurance of feeling your own choices are resulting in a performance which stands up to measurement against some benchmark, but I really can't see why this is necessary.
> 
> If you simply work out how much income you need to live on, how much more you want to grow your capital over that to cover inflation etc, and then build your p/f accordingly, why does it need to match any public benchmark?
> 
> e.g. you may (according to your level of capital invested) easily outperform a managed fund average/index/whatever, or you may underperform it, but as long as you're producing a result which works for you, why should it matter?




Julia

If one consistently underperforms say the ASX 50 index and  you have a portfolio of blue chips, this is telling you that you are probably better off using an index approach rather than stock picking.  I use an index for this reason - to determine if my stock picking skills are better than the index


----------



## awg

nulla nulla said:


> If you haven't already done so, I recommend you discuss with your accountant what happens to your component of the SMSF in the event of your demise. It may pay to put it place now, contingency plans to ensure your component is distributed amongst your heirs in the manner you want.




Very valid point, thanks.

I have certainly done this via a "binding death nomination" (which has to be renewed every 3 years. Insofar as it is possible to achieve what you want)

The taxation laws re super inheritance are a straight out death/estate tax, and have anomolies that are very unfair imo.

As a for instance, in some cases, huge tax savings can be made for your dependants by turning over accrued capital gains...so if you die slow from cancer, you can do that, but if you die suddenly, there will be much higher tax to pay for the dependants.

Re Benchmarks..can be as simple as saying I need 7% pa to live, how can I get that with the least risk, or if you want 10%, what return you would need to obtain other portfolio components etc.


----------



## Julia

gooner said:


> Julia
> 
> If one consistently underperforms say the ASX 50 index and  you have a portfolio of blue chips, this is telling you that you are probably better off using an index approach rather than stock picking.  I use an index for this reason - to determine if my stock picking skills are better than the index



OK, gooner, thanks for that explanation:  sounds reasonable.


----------



## brianwh

But Julia, surely you would want to maximise your returns and if you find that you are consistently underperforming whatever benchmarks you choose then you need to look at ways of doing better. I doubt many retirees have "enough" - I think most of us could usefully put to work a little more!!


----------



## Julia

brianwh said:


> But Julia, surely you would want to maximise your returns and if you find that you are consistently underperforming whatever benchmarks you choose then you need to look at ways of doing better. I doubt many retirees have "enough" - I think most of us could usefully put to work a little more!!



Um, Brian, not sure how to say this, but actually (due to stringent efforts in my younger days and doing without a good deal through probably two decades) I do have enough to more than last out my days.

It does so happen that I've consistently well and truly outperformed the XJO (from which most of my stocks are chosen) over several years, but I don't particularly set out to do that.

As I said before, all that matters to me is that I make enough each year to provide enough to live on with sufficient left over to add to capital, consider inflation etc.

At present e.g. I'm happy to be about two thirds in cash because I'm not confident we are into a sustained uptrend.  I may be quite wrong in this.

With the stocks I have, however, they're all in a strong uptrend when I buy them, have good fundamentals, and if the trend reverses, they're out smartly.
So, yes, I still enjoy seeing my profits increase.
But I absolutely don't feel any need to meet any benchmark other than my own.

I know you're resistant to the idea, but if you were to spend around $30 on Stan Weinstein's "How to Profit in bull and bear Markets", I strongly believe much would just fall into place for you and you'd find your choices easier.


----------



## newbie trader

Julia said:


> ...all that matters to me is that I make enough each year to provide enough to live on with sufficient left over to add to capital, consider inflation etc.
> 
> ...don't feel any need to meet any benchmark other than my own.




I have very limited limited knowledge on all things super. I agree with Julia, at the end of the day you are working for your future and therefore careful planning is needed. I would say that following a general benchmark such as the xjo wouldnt be as effective as a personalised strategy as everyones goals will be unique and everyone will be looking to live a different kind of lifestyle.

N.T


----------



## pixel

Having only just come across this "Great Debate", I find the different approaches very interesting.
Gauging from other threads as well as this one, Julia is obviously very successful in what she is doing. Whether it's with or without benchmark or comparison to a managed fund - I get the impression her results are in the upper quartile, if not above. And in that case - provided you love what you're doing and don't feel it a drudgery doing it - there really isn't a need to compare your results with anyone else's.
At least that's how I feel about it. 

The major Fundies have one major problem:, they have a devil of a time to offload non-performing stocks. Look at any share at a time when one of the Majors feels the need to "cease being a significant holder". Unless some other Biggie is keen to pick up a 5%+ stake at current market price, the first sign of heavy selling drives the sp into oblivion.

Not many small(ish) SMSFs will be holding 5% of a company's issued capital. In my strategy, it even says "No more than 10% (of my total funds) can be invested in any one instrument". Even if that were $5M worth of shares, another rule limits the amount I'm allowed to have in speccies - and it's typically those where you find market caps under $100M.

To summarize: Julia's rule (which is one of mine as well) that mandates the sale of under-performers will almost automatically guarantee that her p/f outpaces any of the biggies. Most definitely any index, which cannot help being dragged down by its under-performers.

Try incorporating rules like these:
•	Financial instruments *must *be in a recognisable uptrend when buying a 1st position
•	Subsequent additions *may *be made as long as the uptrend continues
•	Investments *MAY *be sold at any time
•	Investments *MUST *be sold within (pick a time) of their falling below the applicable stop loss

PS for newbie trader: Granted that everybody has their own goals and lifestyle, but I cannot conceive of either of them including "be happy with performance that's worse than the XJO's." If I couldn't better that, I'd throw it all back to a Fund Manager that is linked to Jo.


----------



## gooner

pixel said:


> ....snip...
> Try incorporating rules like these:
> •	Financial instruments *must *be in a recognisable uptrend when buying a 1st position
> •	Subsequent additions *may *be made as long as the uptrend continues
> •	Investments *MAY *be sold at any time
> •	Investments *MUST *be sold within (pick a time) of their falling below the applicable stop loss
> 
> PS for newbie trader: Granted that everybody has their own goals and lifestyle, but I cannot conceive of either of them including "be happy with performance that's worse than the XJO's." If I couldn't better that, I'd throw it all back to a Fund Manager that is linked to Jo.




If I followed your first rule, I would have missed out on some huge profits over the last year.  I picked MQG, ANZ, WBC, STO and some others right at or near the GFC bottom.  IMO they were fundamentally undervalued at the time.


----------



## pixel

gooner said:


> If I followed your first rule, I would have missed out on some huge profits over the last year.  I picked MQG, ANZ, WBC, STO and some others right at or near the GFC bottom.  IMO they were fundamentally undervalued at the time.




So did I. e.g. MQG @ $18. Others similar. 






Actually, I copped a bit of flak when I was fully invested by mid-March.


----------



## Julia

gooner said:


> If I followed your first rule, I would have missed out on some huge profits over the last year.  I picked MQG, ANZ, WBC, STO and some others right at or near the GFC bottom.  IMO they were fundamentally undervalued at the time.



Good for you, gooner.  Maybe that rule needs to be modified to not include such companies as you nominate above?

I'm the first to admit that buying only when a uptrend is clear means I'm giving away profit at the bottom.   

Similarly I've sold stocks which turned down, only to see them go on to make new highs which is a bit irritating.

I guess it comes down to how risk averse or otherwise we are and how much importance we place on capital preservation.


----------



## Julia

pixel said:


> So did I. e.g. MQG @ $18. Others similar.
> 
> 
> 
> 
> 
> Actually, I copped a bit of flak when I was fully invested by mid-March.



I expect the flak has now evaporated given profit you've made since then!


----------



## pixel

Julia said:


> I guess it comes down to how risk averse or otherwise we are and how much importance we place on capital preservation.




That's precisely my point, Julia;
If my strategy has been backtested to the point where I know it shows more winners than losers (about 4:1 actually) then I'm happy to forego a bit of slack at the bottom. Likewise, if I lock in a profit a little too early or too late, "So what?" A profit is a no loss, and I can only start another trade if my capital is preserved. Nothing prevents me from buying back in either ...

_Show me a trader who consistently picks absolute bottoms and tops, and I show you a person who has but a tenuous grasp of truthfulness._
is a corollary to _Making a fortune by selling too early._


----------



## brianwh

pixel said:


> Having only just come across this "Great Debate", I find the different approaches very interesting.
> 
> PS for newbie trader: Granted that everybody has their own goals and lifestyle, but I cannot conceive of either of them including "be happy with performance that's worse than the XJO's." If I couldn't better that, I'd throw it all back to a Fund Manager that is linked to Jo.




I took particular note of this comment when this thread was active a month or so ago. Since then I have done the calculations for the components of my SMSF for the March Quarter and find that the Australian Share component was -1.44% while the S&P 200 Index rose a bit over 1%. This dismal result was largely due to QBE (-16.5%), TLS (-12%) and TOL (-14.5%) although there were several disappointing results such as ARG (-5.5%) and SHL(-7%).

I would be very interested in what others think would be an appropriate response to this situation:

1. Do nothing. This is the first Q that I have had full reponsibility for my SMSF - previously I was using an FP - so I probably need a longer period of data to make a judgement.

2. Sell the underperformers. The problem I have with this is that market commentary on these stocks (leaving TLS out of the discussion - what a "dog"!) is generally very positive.

3. Sell all my Australian equities and move the money into an Index fund or a managed fund.


Any thoughts would be greatly appreciated

Cheers


----------



## pixel

brianwh said:


> ...I have done the calculations for the components of my SMSF for the March Quarter and find that the Australian Share component was -1.44% while the S&P 200 Index rose a bit over 1%. This dismal result was largely due to QBE (-16.5%), TLS (-12%) and TOL (-14.5%) although there were several disappointing results such as ARG (-5.5%) and SHL(-7%).
> 
> I would be very interested in what others think would be an appropriate response to this situation:
> 
> 1. Do nothing. This is the first Q that I have had full reponsibility for my SMSF - previously I was using an FP - so I probably need a longer period of data to make a judgement.
> 
> 2. Sell the underperformers. The problem I have with this is that market commentary on these stocks (leaving TLS out of the discussion - what a "dog"!) is generally very positive.
> 
> 3. Sell all my Australian equities and move the money into an Index fund or a managed fund.
> Cheers



G'Day Brian;

Methinks you wish to be "a little bit pregnant". On one hand you claim full responsibility, but then you cite general market commentary and ask what you should do. FWIW, my suggestion is *First A Trading Plan*.

Start with a strategy that you personally feel comfortable with. Make sure you understand the ramifications of a particular set of rules. The biggest NoNo would be the inclusion of listening to market commentary.
Rather than repeating myself for the umpteenth time, allow me to just link to this collection of brief essays on the subject.

Regardless, however, of whether you take a fundamental or technical approach: *Whenever you buy a share, make notes of the reasons, your expectations, and the action (Plan B) you intend to take when the stock fails to live up to those.* Needless to stress the importance of a stop loss and the discipline to follow it. If you can keep at least 95% of your capital after each trade, you can hardly go broke.

As an example: I started buying TAH because my chart suggests it has started to turn; it's still undervalued and should appreciate towards $9 or even higher; it also pays a good dividend. If it falls by more than twice the average daily volatility, I intend to sell, no matter what - because in that case, I'll get a better return elsewhere. When the chart shows a price recovery, I can still buy back - assuming dividend and other reasons remain positive.

*In summary: I'm leaning towards your suggestion 2; but only you can know which stocks fall into that category. It's your call and your money.*


----------



## gooner

brianwh said:


> I took particular note of this comment when this thread was active a month or so ago. Since then I have done the calculations for the components of my SMSF for the March Quarter and find that the Australian Share component was -1.44% while the S&P 200 Index rose a bit over 1%. This dismal result was largely due to QBE (-16.5%), TLS (-12%) and TOL (-14.5%) although there were several disappointing results such as ARG (-5.5%) and SHL(-7%).
> 
> I would be very interested in what others think would be an appropriate response to this situation:
> 
> 1. Do nothing. This is the first Q that I have had full reponsibility for my SMSF - previously I was using an FP - so I probably need a longer period of data to make a judgement.
> 
> 2. Sell the underperformers. The problem I have with this is that market commentary on these stocks (leaving TLS out of the discussion - what a "dog"!) is generally very positive.
> 
> 3. Sell all my Australian equities and move the money into an Index fund or a managed fund.
> 
> 
> Any thoughts would be greatly appreciated
> 
> Cheers




Hope you used the accumulation index and compared to your return including dividends rather than the raw ASX200 index.

Apart from ARG, I hold the shares you mentioned in my SMSF.  I also held SIP a total dog (down 50%). Had some good ones - AOE, COH, CSL.  I have not compared my SMSF to ASX 200 accumulation index as only intend to do this once a year,  but suspect it likely performed below the index for last quarter. With the individual companies noted, there were some below par results and market overreacted IMHO.  Remember short term the market is a casino, long term it is about cash flows.

My SMSF approach is to hold for the long term but to sell if I think the share is well overvalued (SIP) or alternatively to sell some of a holding if its weighting gets too high due to its price growing very strongly.   Personally, I am happy with continuing to hold TOL, TLS, SHL and QBE.


----------



## brianwh

Thanks Pixel for taking the trouble to make these comments. At the moment I am dealing with the legacy of my time with an FP - most of the stocks I'm in were chosen by him. At this stage I will be getting rid of several stocks - TLS and QBE are high on the list - and will work towards a portfolio of stocks based on a plan or set of rules that I have chosen. 

PS: Your negativity towards market commentary I find a little intriguing. I regularly flick over to the Business Channel and find a high degree of concensus on certain stocks (including some of my underperformers!!! - maybe that is telling me something) which is what I was meaning by positive market commentary


----------



## pixel

brianwh said:


> ... Your negativity towards market commentary I find a little intriguing. I regularly flick over to the Business Channel and find a high degree of concensus on certain stocks...




Sure, I too flick over channels, read comments by (very few) market commentators I know. Sometimes, it can even kick my thoughts into a new direction - the Germans call it "Denkanstoss". But mostly that's background noise and scenery.

If I have formed my opinion of a stock and decided to buy or sell, it doesn't matter what Huntleys or Thompsons report as "Broker Consensus". The most reliable consensus is *for how much is the Market prepared to buy and sell a particular share.* I see that in a daily chart far better than by following someone's opinion that's published in the media. If the current trading consensus drops outside the range that I feel satisfied whth, I always have a Plan B.

Yes, I do have reservations towards the bulk of the Advisory Industry, even more so towards certain specific spruikers and talking heads that try to find an explanation for last night's market jitters. I treat that separate from stock-specific recommendations by analysts I know and trust.
Critical: yes. Cautious: definitely - and from some costly personal experience. But not totally negative


----------



## Julia

Brian, I'm starting to feel like a broken record on this discussion with you.

It sounds to me as though you're still feeling very unsure of yourself and without a firm direction or target.  Hence the dilemma of listening to commentators and then being disappointed when their predictions don't make you money.

Yes, everyone says QBE is a very well managed company.  No doubt it is.
*But this does not necessarily translate into a rising share price*


I'll not say it again after this, but I believe that until you make the effort to get a basic appreciation of how price action works, and base your choices of stocks on the chart along with your fundamental understanding, you'll continue to fall short of what you could reasonably expect to achieve.

I recall your saying quite a while ago, following my suggestion that you learn a bit about charts, that "maybe some time in the future when you really know what you're doing with the fundamentals".   Sorry, but that's just not reasonable.  One doesn't follow the other.  

I don't know how many dollars you've actually lost, but surely spending another $30 to buy "How to Profit in Bull and Bear Markets" by Stan Weinstein just could be worth the investment.  It's written in a very straightforward and uncomplicated way.

If you buy it (and no, I don't get any commission on sales of the book) and do not find your whole approach becomes clearer, then I will happily send you the cost of the book.

I don't mean to be rude, but you've been essentially wallowing around going nowhere for a pretty long time now.  Surely it's reasonable to try something different?

Best wishes and apologies if I'm being too outspoken.


----------



## bunyip

brianwh said:


> Thanks Pixel for taking the trouble to make these comments. At the moment I am dealing with the legacy of my time with an FP - most of the stocks I'm in were chosen by him. At this stage I will be getting rid of several stocks - TLS and QBE are high on the list - and will work towards a portfolio of stocks based on a plan or set of rules that I have chosen.
> 
> PS: Your negativity towards market commentary I find a little intriguing. I regularly flick over to the Business Channel and find a high degree of concensus on certain stocks (including some of my underperformers!!! - maybe that is telling me something) which is what I was meaning by positive market commentary




Brian

Julia gave you some excellent advice in suggesting you buy _'Secrets For __Profiting In Bull And Bear Markets'_ by Stan Weinstein.

Weinstein's approach can be summarised as *'buy the strongest stocks in the strongest sectors, dump them when they stop performing strongly'.*

If you follow this approach you'll find it almost impossible _not_ to outperform both the general market and your financial planner.

If you feel you need a little help rather than doing it all yourself, Australian Alan Hull offers a realistically priced service to help you invest in stocks by using a similar approach to Weinstein's. I've never used this service myself but I know people who have, and I've heard only good reports about it.
Google 'Alan Hull' and see what you come up with.


----------



## brianwh

Thanks Bunyip. Have ordered Weinstein's book. Had quick look at Alan Hull's website and it looks interesting. Worth further investigation.

Cheers


----------



## ghotib

Hi Brian,

We've spent the last 5 years ending salaried employment, selling our house, moving out of Sydney, establishing our SMSF, and looking for a new house. We've made so many big decisions in the dark... errr, based on incomplete information... over that time that we get confused about which one to second guess. I probably have a bit more sympathy for your uncertainties than other people have expressed, but I do agree with the general feeling that you're giving yourself a lot of unnecessary grief. 

The job of commentators is to comment, always regardless of whether they have anything to say and often regardless of what they've said before. You might find you're better off ignoring them completely while you sort out a plan for yourself and focus on implementing and refining that. 

At the moment you seem to be finding flexibility more of a threat than an opportunity, so why not put some constraints on yourself. What about spelling out your investment/trading plan, and the conditions for changing it, in your SMSF strategy. You seem to be wanting some kind of external accountability: the ATO is definitely external  This could be a way to help yourself through these early and uncertain stages until you develop more confidence. You might well generalise the strategy document later, but seeing as you have to have one why not make it work for you.

Good luck. I gotta go check out another mortgage fun... no wait... I mean, I gotta look at a house <sigh>

Ghoti


----------



## awg

brianwh said:


> I took particular note of this comment when this thread was active a month or so ago. Since then I have done the calculations for the components of my SMSF for the March Quarter and find that the Australian Share component was -1.44% while the S&P 200 Index rose a bit over 1%. This dismal result was largely due to QBE (-16.5%), TLS (-12%) and TOL (-14.5%) although there were several disappointing results such as ARG (-5.5%) and SHL(-7%).
> 
> I would be very interested in what others think would be an appropriate response to this situation:
> 
> 1. Do nothing. This is the first Q that I have had full reponsibility for my SMSF - previously I was using an FP - so I probably need a longer period of data to make a judgement.
> 
> 2. Sell the underperformers. The problem I have with this is that market commentary on these stocks (leaving TLS out of the discussion - what a "dog"!) is generally very positive.
> 
> 3. Sell all my Australian equities and move the money into an Index fund or a managed fund.
> 
> 
> Any thoughts would be greatly appreciated
> 
> Cheers




Another possibility is to consider a core and satellite approach.

for instance, with regard to Oz equity place most in STW, then concentrate your research on just a few high conviction stocks.

Continue to monitor quarterly.

If your stock picks fail to outperform STW over a period of time, time for a big rethink.

I agree Weinstein is a good book, and simplifies the process but you still need to make buy & sell decisions, there are isues of buying at the peak, not being in the market etc. 

What decision making process do you use for asset allocation within your SMSF?

If I perform exactly to match the index with STW alone, I still save a bundle on management fees.


btw TLS has majority buy recos from the analysts atm fwiw, although I wont be buying any, in the shorter/medium term I dont think it will underperform, seeing as you already have it. 

I think a lot of potential bad news is already factored in, and eventually that asshat Conroy will realise a sensible negotiated solution will unlock value for both sides


----------



## Julia

brianwh said:


> Thanks Bunyip. Have ordered Weinstein's book. Had quick look at Alan Hull's website and it looks interesting. Worth further investigation.
> 
> Cheers



Gee whiz, Bunyip.  You must have that magical something!
I've been trying to get brianwh to acquire the Weinstein book for months.
You come on and endorse that suggestion, and voila, it works!





ghotib said:


> At the moment you seem to be finding flexibility more of a threat than an opportunity, so why not put some constraints on yourself. What about spelling out your investment/trading plan, and the conditions for changing it, in your SMSF strategy. You seem to be wanting some kind of external accountability: the ATO is definitely external  This could be a way to help yourself through these early and uncertain stages until you develop more confidence. You might well generalise the strategy document later, but seeing as you have to have one why not make it work for you.



Sensible suggestion ghoti.
Brian, what does your SMSF Investment Strategy say?  When did you last update it?


----------



## brianwh

Thanks for the considered (and considerate) thoughts everyone.

I'm coming to the idea that my situation is somewhat different to many/most of the people who post on here. As I pointed out in an earlier post on this thread, the share portfolio that I have in my SMSF is made up shares selected on the advice of a FP. About 6 months ago I severed ties with this FP but of course still have the share portfolio.

So...

The dilemma I now have is that this portfolio is not matching (in the short time I have been monitoring it) benchmarks like the ASX 200. I regularly read on ASF threads "if I couldn't beat the XJO I'd give the game away" type comments and would like to think that, in time, I could do the same.

Thanks again. Sorry if I'm hijacking this thread and monopolising it for my own benefit.

PS: Julia, you may be pleased to know, I had ordered Weinstein's book before Bunyip posted and it was at your urging! Cheers


----------



## bunyip

brianwh said:


> Thanks Bunyip. Have ordered Weinstein's book. Had quick look at Alan Hull's website and it looks interesting. Worth further investigation.
> 
> Cheers




Brian

Apart from being a very simple and effective strategy for consistently outperforming the market, a big benefit of the Weinstein system is that it requires only one hour of your time each weekend.

The following link could be of interest to you.

http://www.youtube.com/watch?v=wEypGm5ahCI


----------



## Julia

brianwh said:


> Thanks for the considered (and considerate) thoughts everyone.
> 
> I'm coming to the idea that my situation is somewhat different to many/most of the people who post on here. As I pointed out in an earlier post on this thread, the share portfolio that I have in my SMSF is made up shares selected on the advice of a FP. About 6 months ago I severed ties with this FP but of course still have the share portfolio.
> 
> So...
> 
> The dilemma I now have is that this portfolio is not matching (in the short time I have been monitoring it) benchmarks like the ASX 200. I regularly read on ASF threads "if I couldn't beat the XJO I'd give the game away" type comments and would like to think that, in time, I could do the same.



Brian, I think some while ago when we were discussing benchmarks (maybe in another thread) I said that I don't measure the performance of my p/f against any external benchmark.  Rather, I have a % return I need to get from my capital to give me enough to live on, plus cover inflation and make some addition to capital each year.   To this end, there are times when I'll be all in cash, i.e. during the GFC.

Do you think you might be focusing too much on what other people's expectations are for themselves?  As long as you can fund what you need to, what does it matter if you're doing better or worse than anyone else?

If however, you're not feeling satisfied with what your investments are doing *for your own sake*, then it would seem a bit of a change of direction might be helpful.  That's all I've been saying, and I'm very sorry if I was sounding impatient.

If you consider the SMSF Investment Strategy, the prime objective has to be to provide retirement funds to members.  Only you can determine what level these need to be at, and how this can best be achieved.

We will all have our own strategies, but imo when one is no longer participating in the work force, capital preservation and growth should be the main focus.





> Thanks again. Sorry if I'm hijacking this thread and monopolising it for my own benefit.



You are not at all monopolising it, Brian.  We can all learn from one another.



> PS: Julia, you may be pleased to know, I had ordered Weinstein's book before Bunyip posted and it was at your urging! Cheers



Ah, hope you realised my comment was very much tongue in cheek, Brian.
I'll be very surprised if you don't find a new outlook from reading it, and it will also be really helpful in your deciding which of your existing shares to flick off.
Hope you'll let us know how you go when the book arrives.
And, I'm absolutely serious about reimbursing you the cost if you don't find it helpful!


----------



## Muschu

Hi Brian

You and I have communicated as you will recall.  

Bunyip and Julia offer experienced quality advice.  I guess the bottom line is that we all need to find an investing path that suits our personal situation -- and here we will vary from one another.  But I do consider it important to have a strategic path -- even if it is one that changes.

As I have told you I use a professional analyst with whom I am comfortable.  I do not have the expertise to operate without some guidance and am happy to pay reasonable fees to a good strategist.

I've also been in cash more than once during the GFC but am in the market now [since March 2009] - to the tune of about 75% - and also ready to leave again if need be.  

I have had a quick look at Alan Hull's website [thanks Bunyip] and will check it further.  

And these recent posts have caused me to take Weinstein's book off the shelf again for another read.

I think the most important thing I have learned is that I will not win on my investments every time.  If I have to sell at a loss I will.  But this past year in particular the win:loss ratio is strongly in my favour.



Cheers

Rick


----------



## harks11

This is my first post, so first off I would like to say thanks all those who give their rich experience to the mugs like me out there who are thoroughly fed up with the feeling of being ripped off by commissions. I have a fairly healthy super account with a  retail company. and it has not generated enough to reinvest one dollar. It all goes on costs. I was going to move it into and Industry Fund but with a some work I see the smsf being so much better in many ways.

From reading the many posts it is important to "monitor" the stock reasonably closely. 

Q1  Can you suggest or point me to where there is some advice (or opinion) on the best cost effective program for that. 

At this stage my plan is to wait for the fin year to be over, move my money to an industry fund in cash then move most out to my smsf.

I am over 50 so still getting contributions from work and the Industry fund will provide a simple cost effective vehicle for contributions and insurance 

Q2 Does this make sense ?


----------



## Julia

Why go through an industry fund before setting up your SMSF?


----------



## harks11

Julia said:


> Why go through an industry fund before setting up your SMSF?




After reading through the posts. It looked like an easier way to transition. Will the employer have any issue with depositing to a smsf.


----------



## sails

harks11 said:


> After reading through the posts. It looked like an easier way to transition. Will the employer have any issue with depositing to a smsf.




I don't think it should be a problem unless it's employer specific.  Once your smsf is set up, you supply them with the details as you would for any other super fund of your choice.


----------



## Mavis

Providing you are not a Government employee your employer can deposit funds directly into your SMSF. With regards to Insurance before you roll the funds over you may want to check if you are required to leave a balance in your exisitng fund to keep your current insurance. I would recommend keeping your existing insurance until you have found alternative insurance to ensure there is no period in which you are not covered. You can hold life and TPD insurance in your SMSF.


----------



## vincent191

Before your Employer can contribute to your SMSF they wil need a letter from ATO that it is a complying fund. Quite easy to get.


----------



## Mavis

Your accountant will suppy the complying fund letter once the ABN and TFN have been issued.


----------



## harks11

Thank you all , great feedback. I am growing in confidence every day that this is the right thing to do. Its just new. 

Any thoughts on my second question on software. I had a look at the software section and can not believe the range.


----------



## Mavis

For trading/Investing or administration of SMSF?


----------



## Julia

harks11 said:


> Thank you all , great feedback. I am growing in confidence every day that this is the right thing to do. Its just new.
> 
> Any thoughts on my second question on software. I had a look at the software section and can not believe the range.



First, you probably need to decide which way you want to go with the setup of the SMSF.  Esuperfund (and I think a few others that are similar) apparently do the preparation of the Trust Deed/basic set up plus the first year's tax return and audit for less than $1000.  Someone will correct me if I'm wrong about this.

Or you may want to use an accountant who specialises in SF's to arrange the set up, and separately to do your annual tax return and audit.
I have and like the latter arrangement.  It's a bit more expensive but I prefer the personal contact.  Also, I feel assured that if there are any regulatory changes my accountant will make sure I'm kept advised or he will take any necessary action.  

Then you'll be required to prepare an Investment Strategy, outlining the purpose of the Fund and how you intend to invest to achieve that outcome, revising this document each time you change the investment strategy.
So have you decided how you believe you can best achieve the retirement benefits you expect, i.e. how will you invest and manage the available funds?

Are you comfortable with making your own investment decisions, e.g. which shares to buy, when to buy and sell, how much to keep in cash, etc?


----------



## Boggo

Julia said:


> Or you may want to use an accountant who specialises in SF's to arrange the set up, and separately to do your annual tax return and audit.
> I have and like the latter arrangement. It's a bit more expensive but I prefer the personal contact. Also, I feel assured that if there are any regulatory changes my accountant will make sure I'm kept advised or he will take any necessary action.




Agree, I have the same, not the cheapest way but still the best.



Julia said:


> Then you'll be required to prepare an Investment Strategy, outlining the purpose of the Fund and how you intend to invest to achieve that outcome, revising this document each time you change the investment strategy.




A good accounting firm will tell you what you need to provide or what you need to change etc.
Most, if not all of the forms/documents that you require are available on this site.
The link is to the Investment Strategy form... http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=43


----------



## harks11

Once again thanks for the good words. I am 200% sure that the smsf is the way to go. Now just the mechanics of getting it set up. I see the sense in a accountant (who is a expert in smsf) to help with this and have started a search in Brisbane for a good one. Thats the challenge, the reference. I like the idea of keeping the business independent then if I have to change mangers / advisors if I need to. Esuperfund looks good as well. I assume that I would buy extra services from another party anyway.

Julia, happy to do the investment side, although realise I have lots of learning to do. I have a good non accountant view of what makes big business tick so that is a start. Have had a small holding of shares before The income strategy I think may be interesting as I have zero there, May have to ask dr google and the accountant for some help. 

First step I think is to esuper or not. Interesting that esuper does not have a lot of competition in its area. It does get some nice words on this forum (and some others).


----------



## harks11

After toying with the decision for months its all go and after a week of heavy lifting.


Week 1 report

	The last week I have immersed myself in smsf to get going. Interesting to watch the market go south and still watch the fees go out the door. I am blown away by the quality of the discussion on the forums and the willingness to help. What the hell have I been doing for the last ten years.

So where’s my head at. 

Pass on esuperfund (still feel a bit green for them), and find a small company with and experienced person to administer the fund. (big companies still want a big number). Cost about 2k

Use an incorporated company instead of an individual approach on the fund. There are many upsides and few downsides. Extra cost minimal

I am thinking about shifting the money across from my existing account in blocks to minimise risk.

Not sure about the best trader / bank combination. Comsec / ANZ is widely used But Talk on the forum is about IB Traders being the best. I am not sure if that is a generic term or a company? I see a US company but none in Oz by that name

Is there much difference in the trader services? Bell Direct asking $15 or .1 Sounds like a good deal. Default is Comsec or Etrade

Next week

Still need to sort insurance.

Sign up with new administrator

Think about converting all current investment into cash in preparation for transfer


----------



## Mavis

With regards to Administration i cant stress enough the importance of having a qualified chartered accountant who specialises in SMSF and tax to provide this service to you. Before all the sceptics jump on me, no im not an accountant.....Failure to comply with the SIS Act can lead to significant penalties. CA's may be more expensive but you dont carry the risk of having a non complying super fund. Value isn't determined by cost - pay peanuts get monkeys....

It cost me - $995 for establishment 
company trustee - $850 for estblishment 
Adminstration, Audit, ATO charges - approx $2500 per annum


----------



## awg

harks11 said:


> Use an incorporated company instead of an individual approach on the fund. There are many upsides and few downsides. Extra cost minimal





1) keep the name of your company and smsf SHORT! 

2) big disadvantage corporate, 

most financial institutions will not give you access to high interest rate accounts...cause you are a PTY LTD, your a business mate, as far as their concerned..they have raped me repeadtedly on this matter


----------



## hmmm

Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa


----------



## freddy2

hmmm said:


> Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa




Looks like they did. They will have to change their claim "ESUPERFUND has never increased their fees since establishment and in fact has periodically reduced their fees in line with efficiency gains made." at
http://www.esuperfund.com.au/fees/comparefees.aspx


----------



## awg

hmmm said:


> Did i just notice Esuper's annual fee jumping from $599 pa to $699 pa




seems you are correct

I have noticed there seems to be more & more required from my end regarding paperwork for audit and tax etc.

This can only mean more at their end as well

Another observation I would make is that they must see an awful lot of messed-up returns, based on my opinion of the level of record keeping and understanding-what-you-are-doing required.

Messed-up returns would be undesirable in their low-cost, fixed price business model.

That is one reason suburban accountants charge so much, due to the onerous nature of compliance checking on an active, trading SMSF account


----------



## harks11

awg, are you talking about the transaction account or investing in fix term




awg said:


> 2) big disadvantage corporate,
> 
> most financial institutions will not give you access to high interest rate accounts...cause you are a PTY LTD, your a business mate, as far as their concerned..they have raped me repeadtedly on this matter


----------



## awg

harks11 said:


> awg, are you talking about the transaction account or investing in fix term





both, but fixed term is especially bad.

St George is good.

Nearly all the rest will not allow a Corporate Trustee SMSF to access the same rates as a personal trustee SMSF.

It is very frustrating, and one reason I moved much of my term deposit funds to Hybrid Securities.

I would go so far as to say that I would not go the corporate route unless

A) You need or want to be a sole trustee

B) You already have substantial shares in your personal name


----------



## harks11

Thats a concern. I was looking at the V2 account at ANZ and the Westpac. Both of them are operating at about 4.5. Term deposits seem to be a bit higher but they are not working accounts. A little work required in this area it seems




awg said:


> both, but fixed term is especially bad.
> 
> St George is good.
> 
> Nearly all the rest will not allow a Corporate Trustee SMSF to access the same rates as a personal trustee SMSF.
> 
> It is very frustrating, and one reason I moved much of my term deposit funds to Hybrid Securities.
> 
> I would go so far as to say that I would not go the corporate route unless
> 
> A) You need or want to be a sole trustee
> 
> B) You already have substantial shares in your personal name


----------



## So_Cynical

Mavis said:


> It cost me - $995 for establishment
> company trustee - $850 for estblishment
> Adminstration, Audit, ATO charges - approx $2500 per annum




So averaged over 10 years .. it would cost about 2% annually if you had about 140K in super  so if you were good enough to get a 10% return per year, 20% of that would be eaten up by your accountant doing basically what Esuper would do for less than half the cost of the accountant.

Seems a little over the top to me.


----------



## Julia

So_Cynical said:


> So averaged over 10 years .. it would cost about 2% annually if you had about 140K in super  so if you were good enough to get a 10% return per year, 20% of that would be eaten up by your accountant doing basically what Esuper would do for less than half the cost of the accountant.
> 
> Seems a little over the top to me.



I don't know of anyone who would set up a SMSF with such a small sum as $140K.  It's usually suggested a minimum is $300K.
The average fund value is around $900K.

In most instances, the costs don't increase as the value of the fund increases, so it's actually very cost effective.

I pay just $2000 p.a. for annual tax return and audit and all ongoing discussions with my accountant throughout the year.  I think that's very reasonable for the service and professionalism I get.


----------



## harks11

I also think esuperfund is a good deal, but not as clear cut as one may think. From what I could see the comsec deal at $30 dollars is $10-15 a trade higher than best or .01 The interest at ANZ is a tad lower than say westpacs account and it looks like the V2 account does not pay interest on the first 5000 (may be a special for esuper). The alternate also has the ability to have more flexibility with traders etc. then of course there is the higher admin fee with the private way. On balance I thought there was only a few hundred dollars in it at most so am probably going the private route. There were of course an number of private big firms that were happy to give me gold service for 4 or 5 k..... I let that opportunity pass.

The only thing that I am worried about is awg comment above about a incorporated account not being able to access the good rates. I can not see that, so am worried that I have missed something. a number of  diy super accounts are currently quoting 4.55 which seem competitive. The fixed term ones are obviously higher.

All tremendously  interesting, exciting and a bit scary for this newbie


----------



## Julia

harks11 said:


> I
> The only thing that I am worried about is awg comment above about a incorporated account not being able to access the good rates. I can not see that, so am worried that I have missed something. a number of  diy super accounts are currently quoting 4.55 which seem competitive. The fixed term ones are obviously higher.



What do you mean when you say "a number of DIY super accounts are currently quoting 4.55"?  Do you mean bank accounts?  You are not limited to some bank account that calls itself a DIY Super Account.
You can use any bank account in conjunction with your Etrade or Comsec cash a/c as far as I know.  I use Etrade and have an ANZ V2Plus account which I only use briefly for transferring funds into and out of Etrade.
The balance of my cash is at Rabodirect Online AT CALL and earning 6.4%, plus a smaller amount at call with ANZ earning 5.75%.  So your 4.55 is way less than you should be able to get.

What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts.  That's a problem I've run into only rarely though, and have had deposits with many banks.
Rabodirect seem to have the best at call at present, and are great to deal with.

Don't be afraid, either, to approach a bank you already have an account with to ask if they will offer what a competitor is offering.  I have a term deposit with SUN at 8% simply because I asked if they'd pay that.


----------



## harks11

Julia said:


> ......the balance of my cash is at Rabodirect Online AT CALL and earning 6.4%, plus a smaller amount at call with ANZ earning 5.75%.  So your 4.55 is way less than you should be able to get.
> 
> What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts.  That's a problem I've run into only rarely though, and have had deposits with many banks.
> Rabodirect seem to have the best at call at present, and are great to deal with.......
> .




Thanks again Julia and awg. Stating what should be obvious to me but is not. I feel like a dog off a chain for the first time. Of course move the stuff around, dont let it sit and not work. And yes I had assumed that the cash was left sitting in the super account.


----------



## awg

Julia said:


> What I think awg would have been referring to is that with some banks, some of their specials are available just to people with personal accounts, as they deem SMSF's to be "business" accounts.  That's a problem I've run into only rarely though, and have had deposits with many banks.
> Rabodirect seem to have the best at call at present, and are great to deal with.
> 
> Don't be afraid, either, to approach a bank you already have an account with to ask if they will offer what a competitor is offering.  I have a term deposit with SUN at 8% simply because I asked if they'd pay that.




The problem is very specific to CORPORATE TRUSTEES, as opposed to trustee in personal names.

You ( Harks or others, should fully research the pros and cons)

No-one ever mentioned I would run into the problem

That is, if PTY LTD is in the Trustee name ( which it is for Corporate Trustees, but not other SMSFs), the banks and other financial institutions will not give you the same rate as ordinary SMSFs or personal accounts.

ANZ V2 is especially bad, their attitude was so arrogant and rude and downright hopeless, I withdrew over $400k in protest. AVOID!

Others that will not give the same rate include CBA, WBC, ANZ, AMP, various building societies.

St George and Rabo will.


----------



## Julia

awg said:


> The problem is very specific to CORPORATE TRUSTEES, as opposed to trustee in personal names.
> 
> You ( Harks or others, should fully research the pros and cons)
> 
> No-one ever mentioned I would run into the problem
> 
> That is, if PTY LTD is in the Trustee name ( which it is for Corporate Trustees, but not other SMSFs), the banks and other financial institutions will not give you the same rate as ordinary SMSFs or personal accounts.
> 
> ANZ V2 is especially bad, their attitude was so arrogant and rude and downright hopeless, I withdrew over $400k in protest. AVOID!
> 
> Others that will not give the same rate include CBA, WBC, ANZ, AMP, various building societies.
> 
> St George and Rabo will.



Many thanks for making that clear, awg.  I've sometimes considered changing the structure of my fund but definitely won't now.

Re your comment about ANZ's arrogant attitude, this is something I've noticed in the last year or two.  I've been with them pretty much for ever and used to be really happy with the service.  I still am when it concerns the local branch, but the people in the call centre are simply woeful these days with their lack of willingness to be helpful.  I've actually been thinking of writing a letter to Mike Smith about this.


----------



## So_Cynical

Julia said:


> I don't know of anyone who would set up a SMSF with such a small sum as $140K.  *It's usually suggested a minimum is $300K. The average fund value is around $900K.*
> 
> In most instances, the costs don't increase as the value of the fund increases, so it's actually very cost effective.
> 
> I pay just $2000 p.a. for annual tax return and audit and all ongoing discussions with my accountant throughout the year.  I think that's very reasonable for the service and professionalism I get.




I found a recent and interesting write up on the statistics..ill quote a little and link.



> *The average member balance inside SMSFs is $456,000,* more than 18 times the average non-SMSF member’s balance of approximately $25,000....The common wisdom, based on the level of costs associated with running an SMSF, has been that* $200,000 should be the minimum balance to set up a fund*....The average cost of running an SMSF has declined by 20% between 2006 and 2008 – from 0.86% of the average balance to 0.69% – while the average for all super funds is about 1.2%. However, in dollar terms, *the average operating expense cost rose from $5500 to $6500* over the same period.




http://www.investors.asn.au/bulletins/smsf/2010/02/smsf-statistical-analysis/default.asp


----------



## harks11

awg said:


> The problem is very specific to CORPORATE TRUSTEES, as opposed to trustee in personal names.
> 
> You ( Harks or others, should fully research the pros and cons)
> 
> No-one ever mentioned I would run into the problem
> 
> That is, if PTY LTD is in the Trustee name ( which it is for Corporate Trustees, but not other SMSFs), the banks and other financial institutions will not give you the same rate as ordinary SMSFs or personal accounts.
> 
> ANZ V2 is especially bad, their attitude was so arrogant and rude and downright hopeless, I withdrew over $400k in protest. AVOID!
> 
> Others that will not give the same rate include CBA, WBC, ANZ, AMP, various building societies.
> 
> St George and Rabo will.




Thanks awg, spent the rest of the day yesterday checking. There still is a powerful argument out there for a corporate trustee even with the extra cost. However, it a key play to get access to the higher rates. I going to talk to a couple of banks tomorrow and see if there has been any movement. As you say there is a couple  that already give the good rates but not all.


----------



## poverty

Sorry to butt in on this interesting thread but just a quick n00b question, all these costs and fees for a SMSF; do they need to be paid out of your super itself or can they claimed as a tax-deduction from your taxable income?


----------



## Judd

Before making a decision on whether or not to go down the Corporate Trustee route, put aside the question of accessing a higher rate on terms deposits.

Think at the broader level.  Does the SMSF have more than one member?  If so, what issues are involved if one member dies, eg share transfer to another name and the possible costs involved.  With corporate trustee and change of director(s) is reasonably simple and the assets are already held by the corporate trustee as authorised trustee.

Do members have a separate wills involving discretionary trusts or a beneficiary testamentary trust and/or own real property or other assets in their own individual names or under joint tenant arrangements?  As a corporate trustee can act as trustee of multiple trusts, this may be a factor in your decision.

If you think about it, depending on your circumstances, the fact that you may not get a higher rate for term deposits is only one issue and may not necessarily be the most important one.

Poverty, generally it is a set up cost to the SMSF and it is cleaner for the SMSF to pay but if you have not exceeded the concessional (tax deductible) or non-concessional contribution limits you can fund the set up costs but they are not deductible against your personal income.


----------



## Julia

So_Cynical said:


> I found a recent and interesting write up on the statistics..ill quote a little and link.



That article says the "average member balance is $456K".   That doesn't necessarily denote the value of the Fund which may have several members.

The quote that operating expenses are $6500 is just crazy as far as I'm concerned.  This must be for people who are paying for 'specialist advisers' to do all the paperwork, and heaven knows what else.
There's no reason an average person can't keep perfectly adequate records themselves.

As I said earlier I pay $2000 p.a. to my accountant for tax return and audit, plus all ongoing contact throughout the year.  Only other expense is the ASIC levy of I think around $100 p.a. and brokerage.  That's way less than $6500 all up.

The following might offer some clarification for you:


> Home > DIY super
> Do you fit the profile of a ‘typical’ SMSF trustee?
> 
> By Trish Power on June 10, 2010
> 
> XHello there! If you are new to SuperGuide, you might want to subscribe to our newsletter for tips and all the latest information on superannuation.
> You were searching for "Average SMSF balance in Australia". See posts relating to your search  »
> Note: Every three months or so, we update this article with the latest data on self-managed superannuation funds (SMSFs) issued by the Australian Taxation Office. This article contains the latest data available as at 10 June 2010. The most significant trend evident in the latest statistics is that the average SMSF balance is steadily heading towards $1 million. We expect the ATO to release further data at the end of September 2010.
> 
> The latest ATO statistics on SMSFs (representing SMSF activity up to the end of March 2010) highlight some interesting observations that can be made about the current batch of SMSF trustees.
> 
> Although attempting to slot more than 800,000 trustees running more than 422,000 SMSFs into a box called ‘typical’ is an impossible task, the statistics do shed some light on the average SMSF balance, the ages of SMSF trustees, state of origin, gender balance and income levels.
> 
> Average is not always typical
> According to the latest data available, the average SMSF balance is around $946,000, which means that the superannuation industry is grappling with 400,000-plus SMSFs with close to $1 million each to invest, on average. Another significant trend is that the number of Australians setting up SMSFs is not stalling as predicted by many in the super industry, although the rate of new funds has dipped from the record levels experienced in 2008 and 2009.
> 
> The average fund balance however doesn’t necessarily represent a typical SMSF. Here’s a few interesting statistics:
> 
> More than a quarter of all SMSFs have $200,000 or less in assets, with nearly 10% of SMSFs holding less than $50,000 in assets.
> Another quarter of all SMSFs have between $200,000 and $500,000 in fund assets
> Nearly a quarter of SMSFs hold between $500,000 and $1 million in assets.
> The remaining quarter (26.45%) have more than $1 million in fund assets with 10% of those SMSFs holding more than $2 million in assets.
> The size of a SMSF can also be influenced by the number of fund members – presumably, the more members a SMSF has, the more likely the fund balance will be larger. For the record, two-thirds of SMSFs have two members, nearly a quarter are single-member SMSFs and just under 10% of SMSFs have three or four members.


----------



## hmmm

Julia said:


> I don't know of anyone who would set up a SMSF with such a small sum as $140K.  It's usually suggested a minimum is $300K.
> The average fund value is around $900K.
> 
> In most instances, the costs don't increase as the value of the fund increases, so it's actually very cost effective.
> 
> I pay just $2000 p.a. for annual tax return and audit and all ongoing discussions with my accountant throughout the year.  I think that's very reasonable for the service and professionalism I get.




But what about SMSF's with multiple members? it would be very feasible to set up a SMSF with less than $140k each if there were two people sharing the bill, even more so at 4 people.


----------



## hmmm

Julia said:


> Don't be afraid, either, to approach a bank you already have an account with to ask if they will offer what a competitor is offering.  I have a term deposit with SUN at 8% simply because I asked if they'd pay that.




Great information there, when i worked at westpac i know my branch manager was more than happy to exercise to his (very much kept on the down-low by westpac) limit on increased interest rates for savings accounts and he strongly advocated for the customer to his regional manager to get more if he thought it was necessary. They are also very keen to match interest rates (especially against NAB) as this is one of their key drives towards getting $2 of deposits for every $1 of borrowing.


----------



## harks11

After considering all the facts (that I have). I am going to proceed with the Corporate structure. Might have to fight with fewer banks but all in all  it stacks up. An extra 700 to set up but that pales into insignificance on what I am paying now. I reckon the best part of 16-20k. The future freedom and flexibility are clear

The interest rate is a consideration (thanks awg and Julia). I have sent a few emails and will do a couple of visits to banks this week.

Going to also explore using the working account with St george, ubank or rabo. It would be nice to have a working account with high interest... we will see. It would save a lot of movement.

Small company admin with owner having 15 years experience in tall building in the city working on super. 

... stay tuned for next episode.


----------



## Julia

hmmm said:


> But what about SMSF's with multiple members? it would be very feasible to set up a SMSF with less than $140k each if there were two people sharing the bill, even more so at 4 people.



Yes, but we were discussing value of FUNDS, not individual contributions.
I was replying to the scenario put up by So Cynical where he quoted costs on a Fund value of $140K.

If you were going to have four individuals each with their own contributions, the complications would be immense.  What would happen if two people want to sell a share and the other two don't?   And countless other similar situations.

You would need a very carefully constructed Trust Deed if you were going to do something like this.  I wouldn't touch it under any circumstances.


----------



## hmmm

Julia said:


> Yes, but we were discussing value of FUNDS, not individual contributions.
> I was replying to the scenario put up by So Cynical where he quoted costs on a Fund value of $140K.
> 
> If you were going to have four individuals each with their own contributions, the complications would be immense.  What would happen if two people want to sell a share and the other two don't?   And countless other similar situations.
> 
> You would need a very carefully constructed Trust Deed if you were going to do something like this.  I wouldn't touch it under any circumstances.




Mmmm, very true!!! i never thought about the complications in agreements to buy/sell etc... wow the disputes could be endless.

Lucky when ever my dad and i come to a decision on our fund it's a no brainer as to who's decision will reign supreme ...  [*thinks* one day i'll make an investment contribution}


----------



## gooner

Julia said:


> Yes, but we were discussing value of FUNDS, not individual contributions.
> I was replying to the scenario put up by So Cynical where he quoted costs on a Fund value of $140K.
> 
> If you were going to have four individuals each with their own contributions, the complications would be immense.  What would happen if two people want to sell a share and the other two don't?   And countless other similar situations.
> 
> You would need a very carefully constructed Trust Deed if you were going to do something like this.  I wouldn't touch it under any circumstances.




Julia,

I have a SMSF with two members - myself and and my wife. I thought about adding my young children but you can only have a maximum of four members and the child left out would have been mighty annoyed when older.....

My wife and myself are trustees and so both sign off on decisions of the fund. In reality, she rubber stamps my decisions.  If we both had opposing views on whether to be in cash or shares, then I agree this could be difficult to manage, so it is important to consider who will be in your fund - reality is that it would be unusual to have anything except spouses/children in the one fund.

esuperfund charge $699 (just went up apparently) for a SMSF irrespective of the number of members, so they will give you all the member statements, do the tax etc for $699 a year. Plus the ATO levey of $150 and that is $849 a year. So on a fund of $140k that is 0.6% much less than you would pay in a retail fund.  The introduction of low costs providers means that SMSF can be cost effective on quite low amounts of super - even at $85,000, the fee only works out at 1%.   I have no other costs apart from a small amount of my time.


----------



## hmmm

gooner said:


> Julia,
> 
> I have a SMSF with two members - myself and and my wife. I thought about adding my young children but you can only have a maximum of four members and the child left out would have been mighty annoyed when older.....




Just wondering if there isn't any reason why you can't be a trustee on two superfunds in general?? you don't have to be a member of the second fund. could you mirror the first fund to the second? sure it would create double the paperwork and double the time/effort, but that might accommodate for the additional dependents.


----------



## Julia

gooner said:


> Julia,
> 
> I have a SMSF with two members - myself and and my wife. I thought about adding my young children but you can only have a maximum of four members and the child left out would have been mighty annoyed when older.....
> 
> My wife and myself are trustees and so both sign off on decisions of the fund. In reality, she rubber stamps my decisions.



gooner, I'd imagine this is what happens in most SMSF's.   I have a Power of Attorney for my co-Trustee so sign wherever her signature is required as well as my own.   She only signs the Tax Return.



> esuperfund charge $699 (just went up apparently) for a SMSF irrespective of the number of members, so they will give you all the member statements, do the tax etc for $699 a year. Plus the ATO levey of $150 and that is $849 a year. So on a fund of $140k that is 0.6% much less than you would pay in a retail fund.  The introduction of low costs providers means that SMSF can be cost effective on quite low amounts of super - even at $85,000, the fee only works out at 1%.   I have no other costs apart from a small amount of my time.



Yep, obviously esuperfund provides a very economical service.  I have nothing against them.  I just like having an accountant - prefer the personal contact, and he's also there to bounce off stuff relating to estate planning or anything else.  So I'm paying a bit more than double charged by esuperfund, and given what a small percentage it is of the fund, I'm more than happy to do that.




hmmm said:


> Just wondering if there isn't any reason why you can't be a trustee on two superfunds in general?? you don't have to be a member of the second fund. could you mirror the first fund to the second? sure it would create double the paperwork and double the time/effort, but that might accommodate for the additional dependents.



Hmmm, maybe have a read up of the rules relating to SMSF's.
All members must be Trustees and all Trustees must be members.


----------



## pixel

> Hmmm, maybe have a read up of the rules relating to SMSF's.
> All members must be Trustees and all Trustees must be members.



 Are you sure about that, Julia?
My wife and I are Trustees, but she is not a member in the sense that her Super hasn't been rolled into it; only mine.


----------



## Julia

pixel said:


> Are you sure about that, Julia?
> My wife and I are Trustees, but she is not a member in the sense that her Super hasn't been rolled into it; only mine.



If you check your Trust Deed, you'll probably find that she is recognised as a member as well as a trustee.

Yes, I'm sure.  If you Google "Do all Members of SMSF's also need to be Trustees" you will get dozens of references.
Here is an extract from the first one I came to:



> For a start, you need four or less members. Members of the fund also have to be trustees of the fund. Trustees of the fund have to be members of the fund. Each member is forced to participate in the decision making process of your fund. To protect all members of your fund, no member can be the employee of another member. The only exception is members who are “related”.



 I don't think what funds have or have not been rolled into the SMSF have much to do with it, but someone else may be able to clarify this.
Is the Fund in both your names?


----------



## hmmm

Julia said:


> Hmmm, maybe have a read up of the rules relating to SMSF's.
> All members must be Trustees and all Trustees must be members.




Yes still reading up on it but legislation requires that there be two trustees for a single member superfund. so does that mean that trustees dont have to be members? i can't seem to find anywhere that covers multiple funds i guess i need to look harder... (Makes coffee, slices cake, gets comfortable...)


----------



## pixel

Julia said:


> I don't think what funds have or have not been rolled into the SMSF have much to do with it, but someone else may be able to clarify this.
> Is the Fund in both your names?




The fund is in both trustees' names, yes. But it's also classified as a "single member fund", from which only I can draw payouts. You will find that there is a special clause for single-member funds as far as trustees are concerned:

Setting up a self-managed super fund


> Single member funds
> It’s possible for you to set up your fund with only one member. If you have a corporate trustee for a single member fund, the member needs to be one of the following:
> ■ the sole director of the trustee company
> ■ one of only two directors, that is either
> – related to the other director
> – not an employee of the other director.
> You can also have two individual trustees. One trustee needs to be the member and the other needs to be one of the following:
> ■ a person related to the member
> ■ any other person who does not employ them.
> A trustee or director can’t be paid for their services as a trustee or director in relation to the fund.


----------



## Julia

OK,Pixel.  There seem to be various contradictory bits of advice around.
I just dug out my Trust Deed to see if that makes it clearer, looked at all the legalese in the 30 or so pages and put it back again.

The following is from the ATO:


> ATO regulated fund types
> ATO Regulated Self-Managed Superannuation Fund (SMSF)
> 
> The Tax Office only regulates Self-Managed Superannuation Funds (SMSFs).
> In general, an SMSF (other than a single member fund), is one where:
> there are 4 or fewer members
> all members are trustees or directors of the trustee company
> there are no trustees or directors who are not members
> there are no members who are employees of other members (unless they are relatives)
> no trustee of the fund receives any remuneration for their services as trustee.
> A single member fund with a corporate trustee is an SMSF if:
> no trustee of the fund receives any remuneration for their services as trustee
> the member is:
> the sole director of the company
> one of only two directors where the other director is a relative, or
> one of only two directors and not an employee of the other director.
> A single member fund without a corporate trustee is an SMSF if:
> no trustee of the fund receives any remuneration for their services as trustee, and
> the member is one of only two individual trustees and the other trustee is:
> a relative, or
> not an employee of the other trustee.




I'm not sure that the above actually makes anything any clearer.


----------



## gooner

hmmm said:


> Just wondering if there isn't any reason why you can't be a trustee on two superfunds in general?? you don't have to be a member of the second fund. could you mirror the first fund to the second? sure it would create double the paperwork and double the time/effort, but that might accommodate for the additional dependents.




You can be a member but have a nil balance. And you can be a member and trustee of multiple SMSF's if you like, but that means multiple fees, so seems to be little value in doing that.


----------



## harks11

Project is coming along nicely. Got the legals underway and waiting for some paper work to come back.

Now about brokers and banks. the home account is with Westpac, so as a default that would be easy. But doing a comparison is a little tricky. There are a couple of low cost companies around like IB and Belldirect. But again there is some advantage of having the trader with a bank account, makes easy transfers.

Any experience on the strengths and weaknesses and who to just stay away from. Who has the best free or cheap extras


----------



## Julia

harks11 said:


> Any experience on the strengths and weaknesses and who to just stay away from. Who has the best free or cheap extras



Are you planning to do a lot of frequent trading?   You've given the impression you're pretty new to looking after your own financial future, so I'd have expected not.

If that's the case, I wonder why you're so focused on "free or cheap" ?
Maybe have a read of the Sonray thread on their collapse and reconsider.


----------



## harks11

Julia said:


> Are you planning to do a lot of frequent trading?   You've given the impression you're pretty new to looking after your own financial future, so I'd have expected not.
> 
> If that's the case, I wonder why you're so focused on "free or cheap" ?
> Maybe have a read of the Sonray thread on their collapse and reconsider.




Cheap is relative I suppose. Some of the products out there are thousands.  So I want to stay within the safe swimming area. I have looked at lots of products but think one of the banks or Belldirect offer good service. Just wanted to get some feedback. However, I think I will go with Comsec or westpac.  Comsec is number one in the market gets good ratings in comparisons. From my reading its clear that good research is a must, unsure if that means signing up to the second tier service ($75 ish). Like CommSecIRESS

I am in no rush to do the first trade with the smsf it took me a long  time to save so will be doing the homework, hence sometimes silly questions

And yes very new and stepping carefully. Trying to understand as much as possible.  This site is great for the help it gives. Will start with baby steps to be sure, and very pleased with all and any comments.


----------



## pixel

harks11 said:


> Cheap is relative I suppose. Some of the products out there are thousands.  So I want to stay within the safe swimming area. I have looked at lots of products but think one of the banks or Belldirect offer good service. Just wanted to get some feedback. However, I think I will go with Comsec or westpac.  Comsec is number one in the market gets good ratings in comparisons. From my reading its clear that good research is a must, unsure if that means signing up to the second tier service ($75 ish). Like CommSecIRESS
> 
> I am in no rush to do the first trade with the smsf it took me a long  time to save so will be doing the homework, hence sometimes silly questions
> 
> And yes very new and stepping carefully. Trying to understand as much as possible.  This site is great for the help it gives. Will start with baby steps to be sure, and very pleased with all and any comments.




Hi Harksii,
a question I've just thrown back at another member:
Why don't you investigate Brokers and Cash Management Accounts separately? I also trade with Westpac, but relatively "flat-out", meaning there's not much cash in the CMT, meaning the $5 brokerage I save each time out-earns the paltry interest rate of RBA cash rate minus 2%.
For my Superfund, I trade with PariTrade; their rate is 5c higher ($25.00 instead of $24.95) than Westpac's, but I can break one single trade into up to 12 small bites for a single contract note - and brokerage. They also trade off a Macquarie CMA, which pays full RBA Cash rate interest on the bank balance. And in my Superfund, I have usually amounts that make a 2% difference look a lot more "interesting".
PariTech also give me a hot trading platform, Pulse, free of charge - subject to some "frequent trading" rates that I easily achieve. 

Not saying you should pick either - just making you aware that there's heaps more out there than one or two options you may have stumbled across.


----------



## thestevo888

Hey Guys,
     After six months investing, asking dumb questions on this forum, and getting some great advice (all in no particular order), I have started thinking about creating my own SMSF. I have a pathetically small super balance (not helped by the fact that somehow my super fund managed to lose 25% of my cash in the GFC), but have an accountant mate who is happy to do all the setup and auditing work for free, so hopefully fees won't become much of an issue.

My question for today relates to smsf expenses. I seem to remember someone saying on the forum that they claimed their laptop, internet, etc, as running expenses from their super fund. Is that really possible? Can anyone outline a list of things one could claim? I'm not trying to gouge the thing to death, but if there's legitimate expenses I can deduct, it would seem to make sense. Guess I should ask my accountant mate.
Any thoughts appreciated


----------



## hangseng

thestevo888 said:


> Hey Guys,
> After six months investing, asking dumb questions on this forum, and getting some great advice (all in no particular order), I have started thinking about creating my own SMSF. I have a pathetically small super balance (not helped by the fact that somehow my super fund managed to lose 25% of my cash in the GFC), but have an accountant mate who is happy to do all the setup and auditing work for free, so hopefully fees won't become much of an issue.
> 
> My question for today relates to smsf expenses. I seem to remember someone saying on the forum that they claimed their laptop, internet, etc, as running expenses from their super fund. Is that really possible? Can anyone outline a list of things one could claim? I'm not trying to gouge the thing to death, but if there's legitimate expenses I can deduct, it would seem to make sense. Guess I should ask my accountant mate.
> Any thoughts appreciated





Start here:
http://www.ato.gov.au/superfunds/pathway.asp?pc=001/149/030&mfp=001/149&mnu=49150#001_149_030

I run a now highly successful smsf after taking control of it from large funds that were taking it nowhwere but charged exhorbitant fees no matter if it went up or down.

Don't even consider taking anything from your super except legitimate expenses used "solely for the fund"...Noting you can't charge your fund a fee for your service as a trustee, nor make personal claims as you now suggest.

I would ask why even bother to claim on your fund that you are building to provide for your retirement. Build it up...not look how you can milk it early, the latter will see you in strife for breach of the SMSF rules.

My fund is now up over 300% since the GFC, my old fund is still struggling along and if I remained there I would have only just achieved a near return to where it was just before the GFC. Do I recommend SMSF's? Most definitely provided you have the time and knowledge to maintain it within the rules indicated. And that you truly believe you can do better than managed funds, of which I find quite easy.

Don't take any notice of those that would have you believe you need a minimum of $200,00 to operate an SMSF. Load of cods! I was a late starter and commenced with $84,000 (after my first fund totally wiped out my super in the 80's) and now have over $260,000 and growing rapidly. Something no manage fund has "managed" to achieve.

I have been trading and investing in the stock market since 1986 and heavily so since 2004. I started my SMSF in 2007. Don't go into an SMSF thinking it is easy, it will take significant time and knowledge.

I pay $699 annual fees plus the annual ATO reporting fee, I take nothing else from the fund, I only build it up as quickly and effectively as I can so I can retire comfortably as quickly as I can. 

Most of all keep informed and up to date on all matters related to SMSF and your selected investments and remember above all....it isn't your money...yet!


----------



## thestevo888

hangseng said:


> Start here:
> http://www.ato.gov.au/superfunds/pathway.asp?pc=001/149/030&mfp=001/149&mnu=49150#001_149_030
> 
> I run a now highly successful smsf after taking control of it from large funds that were taking it nowhwere but charged exhorbitant fees no matter if it went up or down.
> 
> Don't even consider taking anything from your super except legitimate expenses used "solely for the fund"...Noting you can't charge your fund a fee for your service as a trustee, nor make personal claims as you now suggest.
> 
> I would ask why even bother to claim on your fund that you are building to provide for your retirement. Build it up...not look how you can milk it early, the latter will see you in strife for breach of the SMSF rules.
> 
> My fund is now up over 300% since the GFC, my old fund is still struggling along and if I remained there I would have only just achieved a near return to where it was just before the GFC. Do I recommend SMSF's? Most definitely provided you have the time and knowledge to maintain it within the rules indicated. And that you truly believe you can do better than managed funds, of which I find quite easy.
> 
> Don't take any notice of those that would have you believe you need a minimum of $200,00 to operate an SMSF. Load of cods! I was a late starter and commenced with $84,000 (after my first fund totally wiped out my super in the 80's) and now have over $260,000 and growing rapidly. Something no manage fund has "managed" to achieve.
> 
> I have been trading and investing in the stock market since 1986 and heavily so since 2004. I started my SMSF in 2007. Don't go into an SMSF thinking it is easy, it will take significant time and knowledge.
> 
> I pay $699 annual fees plus the annual ATO reporting fee, I take nothing else from the fund, I only build it up as quickly and effectively as I can so I can retire comfortably as quickly as I can.
> 
> Most of all keep informed and up to date on all matters related to SMSF and your selected investments and remember above all....it isn't your money...yet!




Thanks HS - Good to know your expertise can be called on even outside the PEN thread!-)  Apologies for the late reply- 
 I lost the thread.


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## superbenefit

thestevo888 said:


> Thanks HS - Good to know your expertise can be called on even outside the PEN thread!-)  Apologies for the late reply-
> I lost the thread.




Yes you can have a self managed super fund (SMSF) with less than $200,000, as long as you are able to put time into running and investing. those are the two areas the ATO has concerns about. 
My wife and started with $60,000, and as i do administration, i can do the bookwork.
It is best to get some support in the admin side, such as an accountant who DOES know SMSF, or an admin service provider to do the bookkeeping, minutes etc. 
For investing, seek some good learning, such as Conscious Investor (no commercial affiliation) which has interesting research by Prof Price, or Stock Doctor - Lincoln Indicators. I have great support from a financial planner and expert broker, so i am not alone. Also Google to find other help.


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## Julia

A point to consider for those who are using any of the mass produced SMSF Trust Deeds, e.g. Esuperfund.

When making your Will, the assets contained within your SMSF are not automatically included in your estate.  
\
The Trust Deed needs to have some particular wording in a binding nomination to ensure your SMSF assets go to whomever you want to leave your estate.

So it might be a good idea to have your solicitor check out the Trust Deed so that there's no question about what happens to your assets in the SMSF.


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## Julia

There's a very comprehensive and useful booklet on what is required for SMSF's within the current "AFR Smart Investor".


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## pixel

Julia said:


> A point to consider for those who are using any of the mass produced SMSF Trust Deeds, e.g. Esuperfund.
> 
> When making your Will, the assets contained within your SMSF are not automatically included in your estate.
> \
> The Trust Deed needs to have some particular wording in a binding nomination to ensure your SMSF assets go to whomever you want to leave your estate.
> 
> So it might be a good idea to have your solicitor check out the Trust Deed so that there's no question about what happens to your assets in the SMSF.



 but if your Deed doesn't include that provision, there's a simple fix:
Type a Binding Nomination, have it c-signed by two witnesses, and file it with the Deed.
All you have to remember then is, add a brief note of re-confirmation every 3 years. That note only requires your signature, no witness necessary.



> *[FONT=&quot]Binding Death Nomination[/FONT]*​
> I, Jack Sparrow, (sole) member of the Chickenfeed Superfund, ABN *********,
> born on the ** of **** nineteen hundred umpty-ump,
> residing at ## somewhere rd, Woopwoop, ####,
> submit the following *Binding Death Benefit Nomination*.
> In the event of my death, my (spouse/ child/ lover...) Jill Deadbeat, nee Smith,
> born on the ** of **** nineteen hundred umpty-ump,
> residing at xxxxxxxxxxxxxx,
> shall receive one hundred per cent (100%) of the assets then held by the Fund.
> 
> 
> I declare that I have read and understood the applicable documentation governing Self-Managed Superfunds, and that this declaration is my informed and binding decision.
> 
> 
> 
> ___________________________________          ___________________________________
> Jack Sparrow, as Member                                                                Date
> 
> 
> [FONT=&quot]I declare that the above was signed and dated in my presence, that I am aged over 18 years, and not nominated as a beneficiary.
> 
> [/FONT]




Additional beneficiaries may be added with varying percentages, as deemed appropriate; likewise provisions in case one nominated person pre-deceases the member.


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## hangseng

Thanks pixel and Julia, one of the best information threads I have seen on any forum.

You have just answered a question I was about to put up about estates and the binding death nomination.

Here is a another question if I may:

I plan to fully retire at 55 or near thereafter. I am currently looking at if I can obtain a lump sum payment of my total super and thereafter manage the funds myself.

I have major benefits in doing so working and now living permanently overseas as a (ATO confirmed) non-resident of Australia. I had to make significant changes recently to my SMSF to ensure compliance with residency rules and specifically the "central management and control" rule. That side is now sorted and I am now looking at what options are avalable to me should I choose to retire from fulltime work (or maybe just all work).

At 55 or >
1. Can I take a lump sum and close the smsf?
2. Do I have to take a partial lump sum and maintain the fund until 65?
3. Is the only option a pension?

From what I have found I believe my preferred Option 1 is possible providing I completely retire permanently (or at least have the intent to). The other two aren't my preferred and I would probably continue working for a few more years even if just part time.

By the way I am seeking an accountant with good knowledge of expat matters. I am finding that quite difficult and mostly it is me telling my accountant so I am sure I could be missing important aspects.

Have a great Easter all
HS


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## Junior

hangseng said:


> Thanks pixel and Julia, one of the best information threads I have seen on any forum.
> 
> You have just answered a question I was about to put up about estates and the binding death nomination.
> 
> Here is a another question if I may:
> 
> I plan to fully retire at 55 or near thereafter. I am currently looking at if I can obtain a lump sum payment of my total super and thereafter manage the funds myself.
> 
> I have major benefits in doing so working and now living permanently overseas as a (ATO confirmed) non-resident of Australia. I had to make significant changes recently to my SMSF to ensure compliance with residency rules and specifically the "central management and control" rule. That side is now sorted and I am now looking at what options are avalable to me should I choose to retire from fulltime work (or maybe just all work).
> 
> At 55 or >
> 1. Can I take a lump sum and close the smsf?
> 2. Do I have to take a partial lump sum and maintain the fund until 65?
> 3. Is the only option a pension?
> 
> From what I have found I believe my preferred Option 1 is possible providing I completely retire permanently (or at least have the intent to). The other two aren't my preferred and I would probably continue working for a few more years even if just part time.
> 
> By the way I am seeking an accountant with good knowledge of expat matters. I am finding that quite difficult and mostly it is me telling my accountant so I am sure I could be missing important aspects.
> 
> Have a great Easter all
> HS




IF you have satisfied a 'condition of release' you are able to take all of your benefits as a lump sum once reaching age 55.  Tax may be payable depending on how much is 'taxable' and how much is 'tax free'.

If you have reached preservation age but haven't satisfied a condition of release you can take a transition to retirement pension whereby the maximum pension payment is 10% of the account balance per annum.

The above applies to australian residents, if you reside overseas you'll need advice on what you can and can't do.


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## xyzedarteerf

hangseng said:


> Thanks pixel and Julia, one of the best information threads I have seen on any forum.
> 
> You have just answered a question I was about to put up about estates and the binding death nomination.
> 
> Here is a another question if I may:
> 
> I plan to fully retire at 55 or near thereafter. I am currently looking at if I can obtain a lump sum payment of my total super and thereafter manage the funds myself.
> 
> I have major benefits in doing so working and now living permanently overseas as a (ATO confirmed) non-resident of Australia. I had to make significant changes recently to my SMSF to ensure compliance with residency rules and specifically the "central management and control" rule. That side is now sorted and I am now looking at what options are avalable to me should I choose to retire from fulltime work (or maybe just all work).
> 
> At 55 or >
> 1. Can I take a lump sum and close the smsf?
> 2. Do I have to take a partial lump sum and maintain the fund until 65?
> 3. Is the only option a pension?
> 
> From what I have found I believe my preferred Option 1 is possible providing I completely retire permanently (or at least have the intent to). The other two aren't my preferred and I would probably continue working for a few more years even if just part time.
> 
> By the way I am seeking an accountant with good knowledge of expat matters. I am finding that quite difficult and mostly it is me telling my accountant so I am sure I could be missing important aspects.
> 
> Have a great Easter all
> HS




It just so happens I have been reading up on this today...heres is the actual Payment Standards for Regulated Superfund regarding cashing of benefits.

http://www.apra.gov.au/Superannuati...ndards-for-Regulated-Superannuation-Funds.pdf


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## xyzedarteerf

Also for those who have Super money left from funds that have less than $200 balance this can be cashed out from the fund holding them instead of leaving the money until its eaten up by fees. Have a safe Easter everyone.


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## warennie

xyzedarteerf said:


> Also for those who have Super money left from funds that have less than $200 balance this can be cashed out from the fund holding them instead of leaving the money until its eaten up by fees. Have a safe Easter everyone.





By law, fees are not allowed to exceed capital growth on balances under $1000... However most standard accounts come with life insurance as a default, and premiums from life insurance will be taken out regardless of growth.


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## pixel

warennie said:


> By law, fees are not allowed to exceed capital growth on balances under $1000... However most standard accounts come with life insurance as a default, and premiums from life insurance will be taken out regardless of growth.



 And that, gentle reader, makes it a no-brainer to opt OUT of the life insurance as soon as you have enough funds in Super to see your family through.

Let's say you're aged 50 and have a couple hundred K in your super account. Why then waste premiums on a life insurance, given that your spouse gets the lot tax-free anyway? Especially when you're running your own SMSF, you ought to be able to earn more from your own investing/ trading than have a fat cat bet against your life expectancy.


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## Reasons

pixel said:


> And that, gentle reader, makes it a no-brainer to opt OUT of the life insurance as soon as you have enough funds in Super to see your family through.
> 
> Let's say you're aged 50 and have a couple hundred K in your super account. Why then waste premiums on a life insurance, given that your spouse gets the lot tax-free anyway? Especially when you're running your own SMSF, you ought to be able to earn more from your own investing/ trading than have a fat cat bet against your life expectancy.




I always used life insurance as the gap between what you wanted as the end goal in Super and what was missing. Eg, you have $200K, but really need $2m by 'x' age, then you covered your family that way should either partner die, therefore meeting the end goal regardless and making sure the other partner could easily cope financially.


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## Julia

pixel said:


> but if your Deed doesn't include that provision, there's a simple fix:
> Type a Binding Nomination, have it c-signed by two witnesses, and file it with the Deed.
> All you have to remember then is, add a brief note of re-confirmation every 3 years. That note only requires your signature, no witness necessary.
> 
> 
> 
> Additional beneficiaries may be added with varying percentages, as deemed appropriate; likewise provisions in case one nominated person pre-deceases the member.



Sure.  All I was attempting to do was to bring the need to check to the attention of people who may not have been aware of this.


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## village idiot

general question;
I'm sure there are a number of books on this subject, but can anyone recommend any one in particular that is like the 'bible' of SMSF?

specific question;
I cant find a definitive answer anywhere on the net - can you write put options within a SMSF (the answer seems to be yes but not definitively),  and if so do they need to be 100% cash secured  , or is it enough just to meet the relevant margin requirements?

thanks in advance


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## Boggo

You should be able to find something on either the left or right side items on this page below
Don't forget that your trust deed needs to also show what you are investing in.

http://www.ato.gov.au/superfunds info


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## Julia

Boggo, the Trust Deed doesn't need to show what the Fund is investing in, unless presumably you have incorporated the Investment Strategy into the Trust Deed.

To do this wouldn't seem to make much sense as pretty obviously the investment strategy for most people is going to change according to market conditions and the situation of the member(s).

I just update the Investment Strategy from time to time and this is just a couple of paragraphs.


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## Boggo

Julia said:


> I just update the Investment Strategy from time to time and this is just a couple of paragraphs.




Not that simple with derivatives (assuming writing options are an approved derivative), a dividend risk statement (DRS) must be prepared and both the Investment Strategy and Trust Deed must reflect that ability is my understanding of the rules, I am willing to be corrected though.

 LawCentral
and 
SuperGuide


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## village idiot

thanks for your reply boggo. have already trawled the ATO website  without much luck. 

this is from your first link;



> What is a derivative?
> A derivative is defined as a ‘financial contract whose value depends on, or is derived from assets, liabilities or indices (“the underlying asset’). Derivative Transactions include a broad assortment of instruments such as forwards, futures, options, share ratios, warrants, swaps and other composites.’
> 
> Can my Self Managed Superannuation Fund *invest in* derivatives?
> If your Self Managed Superannuation Fund Trust Deed and Investment Strategy allows this type of investment, then yes.




the second para seems to confirm the point about the trust deed, but i would assume a blanket statement about buying *and* selling ETOs would cover that part of it. 

dealing in options is clearly ok, but the problem i have taking statements like the above as confirmation is that they all use the term 'invest in', which to me implies buying rather than writing, which might or might not match the intent of the rules. I am not sure if this is deliberate or they are just using the word incorrectly.


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## Julia

You're likely right about the Trust Deed having to specifically allow for derivatives, Boggo.
I don't use them so haven't had to consider that.
If I wanted to get a clear definition I'd be contacting the ATO rather than just relying on my interpretation of anything on their website.


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## Boggo

Julia said:


> If I wanted to get a clear definition I'd be contacting the ATO rather than just relying on my interpretation of anything on their website.




Agree Julia, especially if intending to write puts.

I had to produce a DRS etc a few years ago to be compliant when using Instalment Warrants.


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## village idiot

boggo, moved response re 'Superannuation warehouse' here to keep both threads on topic;

yes well that will depend a bit on how quickly they respond and how well they answer the questions I put, so I will let you know how that turns out.... 

apart from that, I am impressed by their website and the information on it (templates etc), and the $79/month deal seem the best I have come across for what it includes (although I havent trawled them all for sure). Provided you supply them with good data and check the work they send back, i dont see any need to pay any more.

I have downloaded their templates and amended them, and as long as they look like they are somewhat efficient in responding to my queries I think I will be giving them a go. 

In fact if I didnt trade options and just wanted a place to store shares, I would have no problems swapping to Bell Direct and going for the $39/month deal, as their share trading costs at $15/.1% are less than comsec anyway


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## village idiot

superannuation ware did respond last night. here are the 2 questions and their answers;

1) Are there any known problems with using Interactive Brokers as broker for shares and options? There seems to be some possible problem in that they dont offer Chess Sponsorship so there is no HIN (at this time). They also do not issue a dividend statement which specifically notes the franking amounts and tax credits on dividends. But it is easy enough to look up the franked % and rate on the ASX website and apply them. 
2) Is or is it not Ok to write options in a SMSF, and are those sort of transactions covered under your monthly fee ? I am thinking here of covered calls (pretty sure these are ok)  but also puts. I cannot find any definitive answer on writing puts on the net. 
  Further, if written puts are allowed, is it known whether they must be 100% cash secured, or i am thinking it would be ok as long as the margin requirements are covered with cash (which is the equivalent of posting margin for CFDs in cash). 


ANSWERS
1. You can use any broker you want as long as the account name is in the name of your SMSF. Dividends should be deposited in the bank account or will be reflected on the broker statement as a re-investment. 

2. You want write call or put options. As long as the purpose of the fund is to provide for your retirement income. You can not be an active short term trader running a business in a SMSF. Writing call and put options is earning an income on an asset, so thats OK.


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## Boggo

village idiot said:


> 2. You want write call or put options. As long as the purpose of the fund is to provide for your retirement income. You can not be an active short term trader running a business in a SMSF. Writing call and put options is earning an income on an asset, so thats OK.




Is that a contradictory statement or am I misunderstanding it ?

Instalment warrants are the limit of my derivatives.

I will be in Melb sometime in the next few weeks so I might pop in and see these people.


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## Julia

The following comes courtesy Colin Twiggs who probably won't mind it being reproduced here.


> What's New: Borrowing Inside Your SMSF
> By Warrick Hanley and Nathan Baker
> July 13, 2011 2:00 p.m. AET
> 
> This newsletter is subject to Incredible Charts Terms of Use.
> 
> 
> BackgroundSMSF Education is Australia's leading online educator for Self Managed Superannuation Fund trustees. Two of their founders Warrick Hanley and Nathan Baker have extensive experience in the SMSF sector, both being principals of their own SMSF specialist advice firms and accredited SMSF Specialist Advisors. They are active participants in the DIY Super industry with Warrick a former Director of the Self Managed Superannuation Professionals Association (SPAA) and Nathan on the SPAA National Regulatory Committee.
> 
> SMSF Education is the only education provider to have their content reviewed by an external party and accredited via SPAA as part of their industry best practice standards for SMSF Trustees. This ensures the information provided remains at the highest standard.
> 
> I hope you enjoy this guest article.
> ~ Colin Twiggs
> 
> Prior to 1999 super funds commonly used related trusts in which to hold leveraged assets. However, after 1999 funds could no longer establish these trusts, meaning that if the SMSF trustee wished to purchase an asset they needed to have sufficient money within the fund. This was a considerable problem when dealing with particularly large assets such as business real property.
> 
> Legislation introduced in 2007 with respect to instalment warrants took the industry by surprise as it once again allowed private borrowing structures provided certain criteria are met. Suddenly buying leveraged assets within a SMSF was once again possible.
> 
> The important difference between an SMSF borrowing directly and, for example, investing in an unrelated unit trust which has borrowings, is that within the unit trust arrangement the liability for repayment of that debt is limited to the value of the units purchased. In setting up any future borrowing trust, maintaining this limited liability is of vital importance if the trust arrangement is to comply with the law.
> 
> The current government has expressed concern as to whether leverage is appropriate within superannuation and whether there could be a rise in opportunistic marketing on the part of product manufacturers. To date, there has been little evidence of this. However, recent changes have further restricted the use of these structures, and if you are thinking of setting one up, make sure you know the limitations and whether these still suit your purpose.
> 
> As it now stands a superannuation fund is permitted to borrow under the following circumstances:
> 
> the borrowing is in the name of the SMSF trustee
> the borrowing is to acquire an asset that the SMSF trustee would normally be allowed to acquire (for example, the SMSF cannot acquire residential property from a member using a borrowing trust, because this would breach the rule concerning acquisition of assets from related parties)
> the asset must be held by a separate trustee (a bare trust)
> the SMSF trustee makes an instalment payment to receive beneficial ownership of the asset
> further payments are required to obtain full legal ownership
> all income such as dividends, rents or interest accrue for the benefit of the SMSF trustee
> the borrowing is limited recourse: the lender's right to recover in the event of default is limited to the primary asset being purchased
> at the end of the loan period the holding trustee transfers full legal ownership
> It is very important that you get the structure right or it will cause problems with respect to compliance, which can necessitate a very costly unwinding of the transaction as well as incurring penalties. It can also lead to increased tax and/or stamp duty.
> 
> Who Can Be the Lender
> Banks: These perhaps remain the most common form of finance. While the banks are warming to this sector the disadvantages can be a relatively low lending ratio and a premium interest rate being charged due to the limited recourse nature of the loan. The banks may also ask for personal guarantees on the part of the trustees and/or members and this is permissible provided the rights of the guarantor are limited in the same way as the lender.
> 
> Member Finance: Where the member has sufficient assets or the capacity to borrow against other non-superannuation assets and subsequently extends finance to the super fund. This can overcome many of the problems which arise when financing through third parties.
> 
> Limitations of the Borrowing Rules
> It is important to remember that the super fund can borrow to purchase an asset or a replacement asset. The borrowing rules do not extend to the situation where you wish to borrow in order to renovate or improve an asset. Nor can the super fund refinance an asset that is currently debt free within the fund or re-leverage the asset that is held within the borrowing trust.
> 
> The new laws further restrict this to the purchase of a single asset or group of identical assets. For example, a building or a parcel of BHP shares would be acceptable. The former is a single asset, while the second is a group of identical assets. However, you would not be able to use the trust to purchase a diversified portfolio of different shares. The new rules also significantly limit your ability to change the asset being held. Selling one property and buying another will not be allowed, nor would selling your BHP to buy ANZ. Likewise, you could not partially sell down your BHP to take some profit, as the entire parcel must be treated as a single asset.
> 
> 
> ATF = As Trustee For
> 
> Apart from the ability of the borrowing trust to accept a replacement asset in limited circumstances, the trust is to effectively be a one transaction vehicle. So each time you wish to purchase a new asset with leverage you will need to establish a new trust. After the recent natural disasters there are also some serious questions being asked about the ability to rebuild an existing asset even where insurance makes this financially viable. The problem is that this would be considered a replacement asset of a type not permitted by the legislation.
> 
> The introduction of instalment warrant structures has certainly been a welcome move for SMSFs. It is of course important not to lose sight of the fact that the introduction of debt within your asset pool will increase the level of risk that you face. It still needs to fit within your investment strategy and you need to consider your fund's liquidity and insurance needs if a large asset such as property is to be introduced. Finally, there is a legislative risk here, both in terms of the restrictions that are already enforceable, and the very real chance of future change. Weigh up your opportunities and risks carefully.


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## Mattie J

For anyone using IB for your SMSF do you mind letting me know who you use for you admin work? And if an online provider do you recommend them?

Obviously Esuper is out with IB.  The increase commissions on option contracts for me would be around $3,000 pa which would more than wipe out any savings in admin fees.

I am with Commsec now with the SMSF but use IB for all other trading.  Once you use IB it is hard to stay with Australian brokers when you realise how overprice and crap their trading platforms are.

I spoke with someone at http://www.superaccounting.com.au who informed me you can use IB as your broker for around $1,500 pa for 300 transactions.  He also warned about selling puts in a super fund and said selling covered calls would be safer.  Hmm right, so I told him I sell synthetic covered calls, he said that was fine.


----------

