# Australians have too much super in shares - Ken Henry



## Starcraftmazter (18 March 2012)

> Former Treasury secretary Ken Henry has called for a radical rethink of the investment strategy of the $1.3 trillion superannuation sector, urging investors to reduce their exposure to shares and increase bond holdings.
> 
> Dr Henry, who is drawing up the government’s Australia in the Asian Century White Paper, said the reluctance of fund managers to invest in corporate bonds and the lack of a local bond market had left retirement incomes exposed to volatile shares and increased the economy’s reliance on offshore financing.




http://afr.com/p/national/super_funds_overloaded_with_shares_pgIHcexXKVaQpIhl0LmbVN


Very true, I do not have the bar chart at the moment, but Australia *far* more than any other country invests almost all of it's super in shares. Most countries invest largely in bonds and other safer fixed-interest.

I wonder how much money we lost as a nation during the GFC because of this? How much are we going to lose in the future? How much money are incompetent fund managers stealing for shorting darts? With the worldwide credit bubble well and truly over, there should be no argument to signing away your money to idiots who want to put it in the stock-market.

Ken Henry is a gold-mine of good ideas. Too bad the government never implements any of them - our economy would be in far better shape if they did.


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## Eager (19 March 2012)

Starcraftmazter said:


> Ken Henry is a gold-mine of good ideas. Too bad the government never implements any of them - our economy would be in far better shape if they did.



The gov't did in fact implement the Henry reccommendation of a restructure of the FBT rules regarding novated and other leases, adding $2b to the coffers over a period of time (4 years?). Consequently, and as a compromise, this means that the carbon tax will not be applied to fuel.

I have a novated lease and when it expires it will probably not be worthwhile for me to either renew it or take out another one, but I have to admit, more people will gain out of this Henryism than will lose.


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## Eager (19 March 2012)

To the question itself: I am led to believe that the majority of Australians are quite happy to leave their super accounts in the default Balanced option of their chosen providers. Surely the reason that most superannuation companies spruik the so-called advantages of high growth investment options and advising members to ratchet up and hang tight is because they normally garner more fees for those options? Some even advise retirees to stay in High Growth because they will supposedly live for another 20 years. Bit risky for me.

I guess it all depends on the risk profile of the individual. Maybe Henry's advice has more to do with trying to get the people to become more interested in their super and act accordingly.


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## tech/a (19 March 2012)

Autralians have no idea how to manage the money they have in shares------tech/a


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## Julia (19 March 2012)

tech/a said:


> Autralians have no idea how to manage the money they have in shares------tech/a



So true.  And are unbelievably resistant to acquiring even the most basic financial and market literacy.  Even people who are otherwise well educated and in successful careers just let their eyes glaze over when it comes to investment.
Totally baffles me.


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## notting (19 March 2012)

And Glen Stevens sais Australia needs a productivity boost. Perhaps Alan Joyce should be put up for a knighthood.


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## Smurf1976 (19 March 2012)

Oh, now I see... We have too much money in shares!

Let me guess... Someone, presumably government, would like to help me with this "problem" by forcing me to "invest" some of this money in whatever under performing idea they just happen to be looking to finance. That sounds about right...


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## ROE (20 March 2012)

I have all my cash, saving, super in shares and LOVE the return even with GFC chuck in the mix 

Would never put my money else where...

Either the cash sit idle at call collect 5% and when I see a good business at a sensible price the cash get deployed - and it usually show up during panic and crash time

Simple stuff, compounding at its best


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## Sir Osisofliver (20 March 2012)

Facepalm Henry is not a goldmine of good ideas. He's an academic with his head firmly implanted in a bunch if assumptions. If you assume you make an ass of u and me. Or in his case the whole bloody country.

The government will introduce all of henrys ideas they will just do it slowly to boil the frog so we don't realize we are being cooked. Asprey et al white paper took 25 years to introduce, you expect Henry to be all at once? Get real, the government need more time and political credit before it forces further stupidities on us.


Starcraft you seem to be sucking the coolaid. When have you lost money in shares? The only question is what did you pay for it and what did you sell it for. If I bought CBA on the float what could possibly motivate me to sell it? I might insure it during mature markets but ultimately the important factor is... What level of return does it give me?

Bonds are not risk free. In falling interest rate environments they appreciate in value, but the reverse is true. What is a normal yield curve? Our market exhibits such a curve 80% of the time. Meaning are market is more likely to have an interest rate that increases over the length of a market cycle before unwinding during the correction.

With super the idea is to hold those assets and grow them over time.....in an environment highly likely to devalue them. 

Don't worry annuities will be the next thing you hear about.

Henry is a tool.

Cheers

Sir O


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## Starcraftmazter (20 March 2012)

Sir Osisofliver said:


>




You're off the mark.


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## cynic (20 March 2012)

At the risk of being off topic - a question for the one to whom all things are known: 

"You do know that there are those whom don't know enough to know just how little they know about how much more there is to know than is currently known, don't you?"  

A follow up question awaits the one whom furnishes a positive reply.


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## tech/a (20 March 2012)

cynic said:


> At the risk of being off topic - a question for the one to whom all things are known:
> 
> "You do know that there are those whom don't know enough to know just how little they know about how much more there is to know than is currently known, don't you?"
> 
> A follow up question awaits the one whom furnishes a positive reply.




Yes


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## cynic (20 March 2012)

tech/a said:


> Yes




Congratulations T/A!

Now that we've established that you know that there are those whom don't know enough to know just how little they know about how much more there is to know than is currently known,  your follow up question is:

"*How* do you know that you're not one whom doesn't know enough to know just how little one knows about how much more there is to know than is currently known?"


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## tech/a (20 March 2012)

cynic said:


> Congratulations T/A!
> 
> Now that we've established that you know that there are those whom don't know enough to know just how little they know about how much more there is to know than is currently known,  your follow up question is:
> 
> "*How* do you know that you're not one whom doesn't know enough to know just how little one knows about how much more there is to know than is currently known?"




The same way you don't know that I am.


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## Sir Osisofliver (20 March 2012)

Starcraftmazter said:


> You're off the mark.




Cool I'm always willing to learn. Where am I wrong?


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## Starcraftmazter (20 March 2012)

Sir Osisofliver said:


> Cool I'm always willing to learn. Where am I wrong?




Well...



Sir Osisofliver said:


> Facepalm Henry is not a goldmine of good ideas.




Ken Henry is one of the greatest people advising our stupid government. Every time he is asked to do something he comes up with an array of great ideas which have a lot of common sense. Just some of the stuff I remember from recently from his tax review;

 - Encouraging people to save by making interest on savings tax-free
 - Fixing the housing market by getting rid of negative gearing and releasing enough land
 - Reforming the tax system to eliminate stamp duty and payroll tax
 - 40% tax on mining
 - increasing the personal tax threshold 



Sir Osisofliver said:


> The government will introduce all of henrys ideas they will just do it slowly to boil the frog so we don't realize we are being cooked. Asprey et al white paper took 25 years to introduce, you expect Henry to be all at once? Get real, the government need more time and political credit before it forces further stupidities on us.




The government doesn't want to implement his ideas - because they are actually good, and often go against the politico-housing complex and other vested interests that run government. You are delusional in your statement.




Sir Osisofliver said:


> If you assume you make an ass of u and me. Or in his case the whole bloody country.




Really? What exactly are you doing here?



Sir Osisofliver said:


> Starcraft you seem to be sucking the coolaid. When have you lost money in shares? The only question is what did you pay for it and what did you sell it for.




Hypocrite.



Sir Osisofliver said:


> Bonds are not risk free.




They are a hell of a lot more risk free than shares for people who don't know how to manage them - which is I'm pretty sure 99.99% of the population. NO other country places so much of their pension money in the stock markets, what this country does is pure insanity.


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## Klogg (20 March 2012)

Starcraftmazter said:


> They are a hell of a lot more risk free than shares for people who don't know how to manage them - which is I'm pretty sure 99.99% of the population. NO other country places so much of their pension money in the stock markets, what this country does is pure insanity.




Bonds are generally viewed as less risky, but this perception is total crap! It all depends on the underlying security... 
Whether it be shares, bonds, derivatives, etc., it all depends on the quality of the underlying security (which includes its ability to make repayments). Ofcourse, bondholders usually get the first shot at the company's assets if they go under, but that's not very comforting in the least...


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## Sir Osisofliver (20 March 2012)

Trying to do this on the phone here goes....

 - Encouraging people to save by making interest on savings tax-free

Yep great idea I like this one...

 - Fixing the housing market by getting rid of negative gearing and releasing enough land

Nope this one is mad... But depends upon implementation. Gearing is an essential component of a compounding curve. Cut compounding curve rates and ultimately you'll be cutting taxation revenue on people who know how to earn it

 - Reforming the tax system to eliminate stamp duty and payroll tax

Taking money from state coffers and moving it into federal using other means. And the federal government do such a great job. Meh I could do without it.

 - 40% tax on mining

Because that's what a commodities based economy needs. A mechanism to redistribute wealth from profitable centres to unprofitable centers. Sorry don't like this one.

 - increasing the personal tax threshold 

Yup like this one and it's overdue.

What so out of 114 recommendations these are the only ones you like?

The government doesn't want to implement his ideas - because they are actually good, and often go against the politico-housing complex and other vested interests that run government. You are delusional in your statement.

Look at history star, you can learn some things. Asprey paper took 25 years to be completed with some very controversial recommendations, like a gst tax. Government will implement slowly so we can get the good things and slowly become accustomed to the bad ones. Case in point. GST was meant to benefit everyone. Who gets the most utility out of it? Rich people, because funnily enough rich people know how to control their spending and poor people do not. I stand by my statement they will introduce slowlyas politics dictate with each party pushing those recommendations that benefit their stakeholders.

Really? What exactly are you doing here?

Giving an offhand comment on a web forum... From a position of understanding. Do bonds act like I have described? Did Ken ignore this blatantly obvious mechanism?



Hypocrite.

Lol. So descending into name calling invalidates the argument? It's a loss when it's realized. If you buy long term assets outside of the ideal time to do so and don't liquidate or protect them in a mature market you can only blame yourself.

They are a hell of a lot more risk free than shares for people who don't know how to manage them - which is I'm pretty sure 99.99% of the population. 

So the devaluing nature of bonds over the longer term means what? Instead of people in super getting a 1% real rate of return in a super fund, they get a negative rate of return. That's ok they don't know how to mange their finances....they won't notice...it'll be our secret.

NO other country places so much of their pension money in the stock markets, what this country does is pure insanity.

So there is something wrong with selecting an asset class that provides both an income and capital growth when compared to an asset class that that only provides an income?

Perhaps your statement needs some reflection.

Cheers

Sir O


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## ROE (20 March 2012)

There is some truth in the old saying

Those who can do
Those who cant teach and 
Those who cant teach manage

Lot of economist and paper pusher are all teachers because they cant do, else they be out making the killing on the market...The real world is a different world from the theory the ideas and the charts...

These guys do provide good information, generate actions and create opportunities 

I can tell you the way I invest, shares is not risky at all, in fact
it is very safe, volatility is part of the game accept it and deal with it in a way that it will bring the cash home...

volatility is not risk in my book..risk to me is if my business going belly up or losing money...price up and down is normal...it's not risky...

I'm accumulating another business now I pray for some panic now so I can get them cheaper, right now I have to buy at market price in order to fill my quota 

I been trying to buy it cheap for the last week and every day it goes up...
so time to pull out Uncle...Philip Fisher golden rule  "Don’t quibble over eighths and quarters" and buy at market price...

if I bought at market price on the first day after extensive research it would have save me 10%. I break Uncle Phil Fisher rules I pay 10% more but I could be missing out 200-300% gain in a few years


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## Bill M (21 March 2012)

ROE said:


> I been trying to buy it cheap for the last week and every day it goes up...
> so time to pull out Uncle...Philip Fisher golden rule  "Don’t quibble over eighths and quarters" and buy at market price...




Well come on mate, spill the beans, now that you have bought you can tell us which company it was.:


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## ROE (21 March 2012)

Bill M said:


> Well come on mate, spill the beans, now that you have bought you can tell us which company it was.:




I will when I am done I haven't it went up again today 
Only got my initial 10,000 shares my quota is 30,000 -

I am waiting for my next flood of dividend pay day on 30/03 so I can get some more.


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## Bill M (21 March 2012)

ROE said:


> I will when I am done I haven't it went up again today
> Only got my initial 10,000 shares my quota is 30,000 -
> 
> *I am waiting for my next flood of dividend* pay day on 30/03 so I can get some more.




Me too, TLS is going to be a big one. OK, now don't forget your ASF mates when you are done....


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