# Who has our best interest in Super?



## Tyler Durden (24 July 2011)

I've been thinking about Super a bit lately, and although it's supposed to be for our 'benefit' when we retire, I really can't see how this is achieved.

Firstly, I have a friend who works in Super, and I don't think there is anything in place that encourages him to do what is best in the interests of those who own the money (putting aside the fact that he spends all day emailing his friends).

Also, another friend told me that they receive commission on gains made, so aren't they motivated to invest in more risky ventures for bigger returns? Yet if they lose money, it doesn't seem to affect their performance assessment - the cost is only to those who own the money.

It's a bit like giving someone your money to play with at the casino, no? You give someone $100,000 to play roulette, and if they lose, they just say to you "oh well, better luck next time", but if they win, they say "because of my hard work and diligence, I have to take x% from those winnings".

If they lose it all, it could mean a very difficult retirement for some.

Wouldn't the concept of Super be better off if the money was just forced to go into an interest bearing bank account with the same withdrawal limitations that exist now?


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## Glen48 (24 July 2011)

Don't worry the fed's want every ones super because they can do a  better job managing it than Any one else including you ,besides they are running out of money and want you super to help the get re-elected  they will spend your money wisely as you sit back retired knowing GW is a thing of the past and you now get cheap renewable energy.

Thanks


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## tinhat (24 July 2011)

I run a Self Managed Super Fund (SMSF). I get to play with my own money within a very tax effective structure. It's a lot of fun!


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## Tysonboss1 (24 July 2011)

Super is not an investment in itself, super is a tax sheltered vehicle inwhich money is set aside for your retirement by your employer.

How you invest or who you get to manage it for you is up to you.

If you want to be 100% cash in your vehicle you can, if you want a high risk manager to gamble your funds on the next best thing you can do that too.

In my view, because these funds that your employer sets aside will be held in your super for the extreme long term 40years, you should have a mix of asset classes being managed by a manager focused on investing rather than hyper active trading.

A mix of quality businesses, property, bonds, and cash.


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## Julia (24 July 2011)

tinhat said:


> I run a Self Managed Super Fund (SMSF). I get to play with my own money within a very tax effective structure. It's a lot of fun!



Not sure I agree that it's lots of fun, but it's interesting and allows you to completely control what your money is doing.
Suggest, Tyler, you save up until you have enough to start your own SMSF.



Tysonboss1 said:


> Super is not an investment in itself, super is a tax sheltered vehicle inwhich money is set aside for your retirement by your employer.
> 
> How you invest or who you get to manage it for you is up to you.



Exactly right.  I don't know why people seem to fail to get this and keep saying stuff like "Super is a con".  
Anyone, even without a SMSF, can still educate themselves and take responsibility for what options they choose according to market cycles, even in a public fund.


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## NewOrder (24 July 2011)

Julia said:


> Not sure I agree that it's lots of fun, but it's interesting and allows you to completely control what your money is doing.
> Suggest, Tyler, you save up until you have enough to start your own SMSF.
> 
> 
> ...




I agree with the above and am starting to get more educated about super. For me ATM super is interesting, from next May onwards I will get the accountant to go through my books pre EOY and throw surplus funds into super to reduce my taxable income. The effect is that it will help to minimise the CGT obligations I have coming up from property sales. I assume this can also be done when I start active share trading.


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## FxTrader (24 July 2011)

Tysonboss1 said:


> Super is not an investment in itself, super is a tax sheltered vehicle in which money is set aside for your retirement by your employer.




Of course super is much more than just a "tax sheltered vehicle" where both you *and/or* an employer make contributions toward retirement.  Strictly speaking, it's not a tax shelter at all since the primary purpose is not tax minimization but the accumulation of assets in a tax advantaged and deferred retirement fund structured and managed in accordance with the SIS Act.



> How you invest or who you get to manage it for you is up to you.




How you invest is governed by the investment strategy of the fund in strict compliance with SIS Act regulations if you opt for an SMSF.  Only an SMSF structure can exploit the maximum flexibility allowed by law in terms of investment options.  

Industry and retail super funds provide far fewer investment choices that are usually restricted to fixed interest vehicles, individual equities and equity funds.


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## Julia (24 July 2011)

FxTrader said:


> Only an SMSF structure can exploit the maximum flexibility allowed by law in terms of investment options.
> 
> Industry and retail super funds provide far fewer investment choices that are usually restricted to fixed interest vehicles, individual equities and equity funds.



Obviously that's true, Fx.  However, people with their super in a public fund can at least surely take responsibility for e.g. protecting their capital in such as the GFC by switching to cash at the appropriate time.
I've seen few doing this and the great majority simply whining about Super 'being a con' because they have left it entirely to the fund managers of some so called balanced fund.


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## cynic (24 July 2011)

Glen48 said:


> Don't worry the fed's want every ones super because they can do a  better job managing it than Any one else including you ,besides they are running out of money and want you super to help the get re-elected  they will spend your money wisely as you sit back retired knowing GW is a thing of the past and you now get cheap renewable energy.
> 
> Thanks




And I thought that I was supposed to be the cynic here! Glen48, I think that you and I are going to have to swap pseudonyms because after reading your posts I no longer feel worthy to hold the title "cynic". You regularly and repeatedly surpass me on that score - well done!

On the subject of super, I agree that for those invested in retail funds that the "cash" option is a more prudent option, although (like Tyler) I'd be much happier if I could tick a box saying keep it in bank term deposits. I don't think it's going to matter that much in the long run because I share Glen48's opinion of the likely future government utilisation of superannuation monies as the !@#$ keeps hitting the fan in our supposedly "recession proof" economy. I foresee the transmutation of compulsory supperannuation from an obligatory retirement saving to just another pseudo tax for the government to dispense with it's usual level of efficiency and accountability.


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## FxTrader (24 July 2011)

Julia said:


> ... people with their super in a public fund can at least surely take responsibility for e.g. protecting their capital in such as the GFC by switching to cash at the appropriate time.
> I've seen few doing this and the great majority simply whining about Super 'being a con' because they have left it entirely to the fund managers of some so called balanced fund.




Unfortunately as you know, super choice and greater flexibility can't and don't improve the general public's apathy toward and knowledge of investing principles.  When I try and talk with most friends about investing, if they will discuss it at all, their eyes glaze over after a few minutes and the topic switches to something less confronting.  Talking about money and investing is just to boring for them or they have rigid views about how to manage their investments that are never subjected to self-review or examination of any kind (until some unforseen event blows a big hole in their nest egg, but that must be blamed on someone else.)

Most are part of the set and forget crowd who trust the invisible hand of other people and institutions to manage their money and complain when these managers don't produce the returns expected and/or judge the system to be a con or rigged in some conspiratorial way.  Sadly, just a fact of life.

Post GFC I thought there would be less apathy by the general public toward how their money is invested but it seems little has changed.  Governments and central banks have papered over the debt crisis until now with the printing press and more debt, especially in the U.S. and complacency has returned.  Most people have no idea just how precariously balanced the world financial system is now.

I for one have gone entirely to cash for now (fixed interest) in wait to see what happens as this Mount Everest of debt comes due and the Aug 4 deadline for the raising of the U.S. debt ceiling approaches.  Interesting times we live in.


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## Julia (25 July 2011)

FxTrader said:


> Post GFC I thought there would be less apathy by the general public toward how their money is invested but it seems little has changed.  Governments and central banks have papered over the debt crisis until now with the printing press and more debt, especially in the U.S. and complacency has returned.  Most people have no idea just how precariously balanced the world financial system is now.
> 
> I for one have gone entirely to cash for now (fixed interest) in wait to see what happens as this Mount Everest of debt comes due and the Aug 4 deadline for the raising of the U.S. debt ceiling approaches.  Interesting times we live in.



I've done the same.  And yes, there seems to be an assumption that all cracks will continue to be papered over, and no one really cares that this is simply kicking the problem further up the line.

Completely agree about the general apathy.  This exists to a really surprising level in people who are otherwise well educated and smart about the decisions they make.
I can't work out why something as important as managing their money should be so different.


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