My strategy/plan going forward

[divs4ever]

I've been doing more research and I recall my accountant was mentioning about investing within your super and you pay a lower tax rate. So I could invest my index fund within my super. Has anyone done this? From what I can tell, how it works is that each super has their own fund, and you can't choose your own index to invest through them? Which I guess makes sense, considering it wouldn't be their product.

I guess the other option is SMSF, but sounded pretty complex when I look at it a while back. My accountant is charging high fees I think, which I might post to get a second opinion.

this NOT financial advice , but maybe you should consider is investing in a specific ETF ( or more ) worth the tax offset ( of going through a super fund , SMSF or not )

some ETFs pay franking credits and depending on your strategy MIGHT be better in a standalone portfolio outside a formal super fund

some ETFs offer dividend reinvestment plan , AND you can buy on-market ( and reduce/sell as you wish

doing this will also give you the option of putting NEW cash into a different ETF whether issued by a different company or just a different focus and picking the times for a strategy deviation

inside a formal super fund puts you at the mercy of Government policies

 

[RbNEO]

this NOT financial advice , but maybe you should consider is investing in a specific ETF ( or more ) worth the tax offset ( of going through a super fund , SMSF or not )

some ETFs pay franking credits and depending on your strategy MIGHT be better in a standalone portfolio outside a formal super fund

some ETFs offer dividend reinvestment plan , AND you can buy on-market ( and reduce/sell as you wish

doing this will also give you the option of putting NEW cash into a different ETF whether issued by a different company or just a different focus and picking the times for a strategy deviation

inside a formal super fund puts you at the mercy of Government policies

To clarify, is this what you mean? If I invest in a seperate ETF outside of super, I will be taxed, but if I invest in my supers product I won't be taxed at pension age. So I'm betting that the money that I lose on tax on investing outside of super, will be less than the money I would have made from investing inside super (my superannuations product), is this correct?

 

[divs4ever]

To clarify, is this what you mean? If I invest in a seperate ETF outside of super, I will be taxed, but if I invest in my supers product I won't be taxed at pension age. So I'm betting that the money that I lose on tax on investing outside of super, will be less than the money I would have made from investing inside super (my superannuations product), is this correct?

yes ,

you will be taxed BUT get full franking credits ( if there are any ) the offset on that is you only pay a brokerage fee if you buy or sell ( with my two platforms )

ALSO you have the choice of participating in the Dividend Reinvestment Plan ( DRP ) if they have one which allows you to accumulate without incurring extra brokerage/fee

in theory you are correct

however in my experience i did WAY better investing the cash in AMP shares ( at the time ) than when AMP managed the money inside my compulsory super

i strongly advise you to crunch YOUR numbers for yourself , and consider what will be best for YOU ( and seek advice from your accountant to confirm your chosen strategy )

maybe your super fund didn't deserve to get hauled over the coals like Hayne did to AMP ( and others )
and while your investments are trapped inside a formal super , the government is likely to change the goal-posts several times before you retire )

and BTW my employer-run super fund seemed to go nowhere before they offloaded it to AMP

 

[RbNEO]

yes ,

you will be taxed BUT get full franking credits ( if there are any ) the offset on that is you only pay a brokerage fee if you buy or sell ( with my two platforms )

ALSO you have the choice of participating in the Dividend Reinvestment Plan ( DRP ) if they have one which allows you to accumulate without incurring extra brokerage/fee

in theory you are correct

however in my experience i did WAY better investing the cash in AMP shares ( at the time ) than when AMP managed the money inside my compulsory super

i strongly advise you to crunch YOUR numbers for yourself , and consider what will be best for YOU ( and seek advice from your accountant to confirm your chosen strategy )

maybe your super fund didn't deserve to get hauled over the coals like Hayne did to AMP ( and others )
and while your investments are trapped inside a formal super , the government is likely to change the goal-posts several times before you retire )

and BTW my employer-run super fund seemed to go nowhere before they offloaded it to AMP

Ah ok, thanks for the info! I forgot to take into account the franking credits, but I guess after that, there is the capital gains tax. I'll weigh it up and see what to do. Was good to have this discussion, important decision to make!

 

[rolly1]

Ah ok, thanks for the info! I forgot to take into account the franking credits, but I guess after that, there is the capital gains tax. I'll weigh it up and see what to do. Was good to have this discussion, important decision to make!

Just something to think about the use of franking credits inside and outside of super. Lets say you receive $1000 ff dividend.
- Outside of super the franking credit gets added onto the $1000 and is your income for tax purposes. If you earn an average salary that franking usually gets paid all back in tax. Nett result $1000.
- Inside super in pension mode 0% tax paid so the franking credit of $428.57 is all kept so your total income is $1428.57. If in accumulation mode then halve that $428.57 figure.

 

[divs4ever]

Ah ok, thanks for the info! I forgot to take into account the franking credits, but I guess after that, there is the capital gains tax. I'll weigh it up and see what to do. Was good to have this discussion, important decision to make!

depending on your goals , no capital gains tax until you sell , currently ( AND keep an ear out for a possible unrealized capital gains tax , which keeps on being bandied about in political circles , that would be an absolute game-changer )

now IF you are young(ish ) you might chose to DRP until you retire , opt out of the DRP on retirement and just receive cash dividends ... ( keeping the portfolio intact )

again that plan may/may not suit you

you can have your compulsory super the normal way and have this other portfolio as a safety line ( in case your formal super isn't enough )

good luck

 

[RbNEO]

Just something to think about the use of franking credits inside and outside of super. Lets say you receive $1000 ff dividend.
- Outside of super the franking credit gets added onto the $1000 and is your income for tax purposes. If you earn an average salary that franking usually gets paid all back in tax. Nett result $1000.
- Inside super in pension mode 0% tax paid so the franking credit of $428.57 is all kept so your total income is $1428.57. If in accumulation mode then halve that $428.57 figure.

Will do, thanks!

 

[RbNEO]

depending on your goals , no capital gains tax until you sell , currently ( AND keep an ear out for a possible unrealized capital gains tax , which keeps on being bandied about in political circles , that would be an absolute game-changer )

now IF you are young(ish ) you might chose to DRP until you retire , opt out of the DRP on retirement and just receive cash dividends ... ( keeping the portfolio intact )

again that plan may/may not suit you

you can have your compulsory super the normal way and have this other portfolio as a safety line ( in case your formal super isn't enough )

good luck

Will take this into account, thanks!

 

[RbNEO]

Hey @qldfrog @divs4ever , I think I found my answer. Investing outside of super for ETF sake makes more sense given the higher rate of return (not taking franking credits into account here because they don't apply to s&p stocks even with an Australian ETF product 'IVV' index)-(I also am assuming this is going to be the continued rate of return for the next 30+ years).

These numbers may be slightly off but should demonstrate the point:
IVV index rate of return last 20 years - 10.41%
Hostplus - 7.88%

I asked ChatGPT to do some crunching for me, and here is what is spat out. I'm of course betting, that the IVV index will continue to outperform my super.

The best course of action seems to be a SMSF, which I'll likely do once I have a lot more money and a significantly higher income. I don't think the fees from my accountant justifies them opening up and managing a SMSF for me, especially considering when **** hits the fan I can't blame then and they certainly won't take the blame lol.

Here's some screenshots. (last screenshot, I redid the calculation based on the last 20 years performance of IVV and hostplus)

 

[divs4ever]

(I also am assuming this is going to be the continued rate of return for the next 30+ years).

a bold assumption , but i hope you have underestimated the returns ( ANYTHING can happen in the markets )

please be aware past performance is only ( at best ) a guide to the future , MAYBE it will be totally different in the next 20 years .. but if outside of a super fund , you have the ability to adapt/change quickly , and 'bulk up' in an uneven manner if you chose

some members here have stories about long delays drawing down , or extracting cash for their fund

please try to ( financially ) educate yourself as much as you can ( whether you employ an adviser/accountant or not ) , it allows you to ask important questions , that most will think will be too complicated for you

ALSO dig into the fine print of your chosen ETF ( and any rivals that seem similar ) those tiny differences can mean a lot over 20 years .

 

[divs4ever]

BTW the Hostplus calculation assumes no change to the tax impacts when you start dipping into that cash after you retire

spoiler alert , there are mutterings about your super nest egg being locked up for life but you get income payments from the investment nest egg , over your retirement life

Three underrated investment risks in retirement​

Three underrated investment risks in retirement

Your chances of having a comfortable retirement are not only dictated by your super fund's investment returns. Investors must also consider the risks of longevity, inflation, and not sticking to the plan.

www.firstlinks.com.au

this website can be immensely helpful in various ways

( it is updated weekly )

 

[rolly1]

Hey @qldfrog @divs4ever , I think I found my answer. Investing outside of super for ETF sake makes more sense given the higher rate of return (not taking franking credits into account here because they don't apply to s&p stocks even with an Australian ETF product 'IVV' index)-(I also am assuming this is going to be the continued rate of return for the next 30+ years).

These numbers may be slightly off but should demonstrate the point:
IVV index rate of return last 20 years - 10.41%
Hostplus - 7.88%

I asked ChatGPT to do some crunching for me, and here is what is spat out. I'm of course betting, that the IVV index will continue to outperform my super.

The best course of action seems to be a SMSF, which I'll likely do once I have a lot more money and a significantly higher income. I don't think the fees from my accountant justifies them opening up and managing a SMSF for me, especially considering when **** hits the fan I can't blame then and they certainly won't take the blame lol.

Here's some screenshots. (last screenshot, I redid the calculation based on the last 20 years performance of IVV and hostplus) View attachment 195732View attachment 195731View attachment 195733View attachment 195734View attachment 195735View attachment 195737

You have to compare apples with apples. IVV = 100% US stock index. HostPlus balance option only about 40% International exposure. That is where the difference lies. If you do an analysis of the volatility of those two to achieve those returns then HostPlus will be along way ahead.

 

[divs4ever]

Extending performance tests to retirement super is a bad idea​

Extending performance tests to retirement super is a bad idea

Most superannuation products offered to working-age Australians are now performance-tested, and there are calls to extend these tests to account-based pensions. It's likely to result in more pain than gain, though.

www.firstlinks.com.au

 

[rolly1]

BTW the Hostplus calculation assumes no change to the tax impacts when you start dipping into that cash after you retire

spoiler alert , there are mutterings about your super nest egg being locked up for life but you get income payments from the investment nest egg , over your retirement life

Three underrated investment risks in retirement​

Three underrated investment risks in retirement

Your chances of having a comfortable retirement are not only dictated by your super fund's investment returns. Investors must also consider the risks of longevity, inflation, and not sticking to the plan.

www.firstlinks.com.au

this website can be immensely helpful in various ways

( it is updated weekly )

Yea not gonna happen. If the government of the day hasn't got the balls to change the GST rate and get rid of all other taxes (which would fix most of their problems) they are not going to make major changes like that to super, sure a bit of tinkering around the edges but nothing major.

 

[qldfrog]

Yea not gonna happen. If the government of the day hasn't got the balls to change the GST rate and get rid of all other taxes (which would fix most of their problems) they are not going to make major changes like that to super, sure a bit of tinkering around the edges but nothing major.

The real issue is not performance, it is freedom of access: who cares if you have even $1 million more if it is locked: fully no access, or access limit when you need it
What about bridging a loan between two RE purchases..you sell your asset do need bridging loan.. you may not get or at horrendous cost.
What if you want to retire early: i stopped work during covid, was 54 at the time.
This would not have been possible with all eggs in super..and do you really think you will access your super before 65?
What you can do , even with AustralianSuper which is a shitty fund is you do a self invest style option and put that self invest into the ETF if your choice if available...
No smsf need, no need to put a lot in one go..or more than you can afford and you can have an egg nest outside super with more freedom

 

[divs4ever]

and do you really think you will access your super before 65?

more likely after 70 or even 75 ( or maybe never ) the way the trend is going



a spouse of a senior federal government official assured me i would be eligible for the aged pension at 65 ( when i was her co-worker ) ... by the time i actually got to 65 it was 66 something THEN 67

lucky for me ( if you call myocardial infarction , lucky ) i qualified for a disability pension a couple of years before turning 65 .. and dodged all that disappointment

Age Pension Application & Eligibility

The Age Pension asset and income tests are updated three times every year. Keep up to date and check your entitlements regularly.

retirementessentials.com.au

after you wade through all the conditions you MIGHT get the idea in 30 years time ... it will be NO PENSION FOR YOU ... and your super will be gutted by investments in 'clean technology '

PRAY that i am wrong

 

[rolly1]

Hmm I don't know guys your are giving up tens of thousands of $ in tax breaks by not going through super. If you are solely going to rely on full age pension then yes I can understand not putting $ into super. If your wage is under 50k I can also understand.
As for not accessing your super till late 60's is wrong. I can literally turn 60 quite my payg job on a Friday and start a new job on Monday and access all my super (not that you would)
There are numerous other ways to access your super at 60 too. I can't remember the exact figure but you have to earn something like 30-50% extra on investments outside of super to equal all the benefits of going into super, being inside and then coming out out of super but there is alot of variables to these figures.