If you employee one who's award hourly rate is $20, you have to pay them $20 for every hour they work, and then pay $1.90 into their super.
Super is always an additional amount added on top of what ever their wages are.
What you do in your family business is your business I guess, but when dealing with outside employees, if you offer them $20 / hour, you don't deducted super from that, you pay super onto of that.
eg. if the minimum wage is $10, the person will earn $10 + $0.90 super. its always additional.
That has always been my experience both with pay received and any negotiations relating to it.eg. if the minimum wage is $10, the person will earn $10 + $0.90 super. its always additional.
For a typical passive investor, yes I did agree that Index fund is probably their best chance for a good return if they want to expose their portfolio to the market/general economy.
I was referring to the professional money managers who simply invest in Indices, or closely track the index. I did say that yes, their non-work work generally beats the more "active" fund managers... but that's the scary bit. To do nothing and beat other more active smart money "pro".
Me pointing to other options beside publicly listed stocks just mean those who are supposed to be smart about these things, charging crapload of money for their geniuses... maybe they ought to do more than track the index or actively play with only publicly listed ones.
Then, imagine the kind of returns they, and their clients, can achieve if they take good opportunities wherever it's found (private or public, depends on the quality and price etc.)... That and not having to automatically buy or sell out of holdings when it's added or dropped from an Index.
I never said it's irrational to invest in the stock market. I said it's reckless to only invest in the market and only buy or sell according to an index.
Over 90% of the people out there would be "typical passive investors"
as I said mathematically it has to be that way, on average those actively trading the market must make less than those passive guys.
The index funds charge the smallest fees, typically less than 0.8%, so they aren't "charging crapload of money for their geniuses" they are charging a fair amount for the work of managing the index, and compete with other funds to reduce costs.
Active funds on the other hand is where the huge fees are, often called " 2 & 20 fees"
eg. 2% of funds under management and then 20% of any return above 8%
Again all I am discussing here is what is the best way for the average person to enter the Stockmarket.
I agree with you there.
How can it be reckless when on average the indexing method delivers the best return from the stock market?
I am not comparing it to other industries etc, I am just saying once a person has decided to enter the Stockmarket, they then must choose a strategy, if the choose the indexing method, how exactly is that reckless?
You have already admitted that in general the Stockmarket is a good place to park some investment dollars, and you admit that index tend to perform ok and better than the average active fund operating in the same market, so how is it reckless?
It's a red herring to say that money should be going else where, because nothing is stopping people investing else where, I am talking about the billions of dollars that will be invested in the market no matter what.
0.8% of, say $100B = 0.008 * 100,000, 000, 000 = $800M.
What's the world's total Index's funds under management? A few trillion?
That's a lot of fees for admin and keeping track with the Index.
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But why a professional fund manager, with all that cash and all the brain power some of that cash can hire... it is reckless for them to simply track the Index and blindly buy or sell depends on a certain company's market capitalisation.
Take Asaleo, that tissue, toilet paper and personal hygeine company. From memory it was floated for some $2B by private equity.
I'm no smart money but any idiot who care to look at the company would run away from it because it's a risky, poor performing business... and its price is too high.
But an Index Fund Manager doesn't care for it. The higher the price, the more they'll buy into.
I said less than 0.08%
but 0.8% is pretty cheap really, I mean that covers all the expenses everything from the the actual trading costs and all the business costs etc etc.
If you think 0.8% is a lot, check out the fee structure of the average active fund.
dude, they don't track the index unless you tell them too.
lots of funds are happy to avoid the index for you, because for a start they will charge you nearly triple in base fees, then they get to speculate with your money and if they do earn over 8% they get 20% of the "excess" earnings,
Heads the win, tales you lose.
The index might put say 0.003% of its funds in stock in Asaleo, but your active manager might think its a great stock and put 20% of your funds in it, Hell he doesn't care he is earning triple fees no matter what, and the investment bank took him out on a boat for drinks and hookers to explain the deal, so he felt obliged to underwrite it.
You know there's opportunities in the current head they win, tale we lose model right?
And as Basillio points to... if the Index includes only high market cap companies, kick out established ones currently suffering from some bad news or corporate setback... adding on ones that's currently in favour. Doesn't that imply that they're always buying high and selling low; always "improving" their results because their results always include rising market cap without taking into consideration the true value beneath the market cap?
This is the core of my reservations about allegedly folowing the index and therefore gradually building up shareholder value through such a process.
There are no losses or costs when the index is rebalanced to drop off poorer companies and replace them with new ones. However as far as I can see in real life companies that follow the index so religiously will lose on each turnover. The situation could be even worse of course if one had a "set and forget" strategy. For example just establishing a portfolio of the top 15 shares in the index and then walking away for a few years.
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I suppose my concern is the use of stock market indexs as, somehow, a measure of how successful an investor could be if he/she ploughed their funds into the market
I recommend listening to some of Jack Bogles interviews or reading one of his books.
He is the father of value investing, and started vanguard, which is not for profit and it is one of the largest indexers.
Are you suggesting death duties should return ?Searched for Inheritance but the threads are usually specific questions from neophytes/ people out of their depth.
Some numbers about estates and who gets what, when.
....
in Victoria, the median estate is worth around $500,000. About 20% are worth more than $1 million, and 7% are more than $2 million. Property is the largest component, accounting for half of the average value.
The main beneficiaries of ‘final’ estates – estates without a surviving spouse – are children, who get about three quarters of all inheritance money. And average inheritances are growing about 2% above the rate of inflation each year, and that’s expected to accelerate in future.
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Dunno, do you think they should be ?Are you suggesting I should suggest the reintroduction of death duties?
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