My AustSuper ASX300 'low cost averaging' trading adventure

[Julia]

Hi Bill

What bothers you about starting your own SMSF?

 

[Bill M]

Hi Julia, mostly the compliance, accounting, auditing and the expense. I did read the esuperfund thread (all of it) and in the end thought it was a bit all too much. Also I hated the thought of using their brokers and there recommended 2 bank accounts and term deposits.(which were lousy in yield) That would mean I would have to do my own set up. I am ok with the investing part but not with the ever changing laws. It's not out of the question it's just that I don't think it's worth it sometimes.

Australian Super might just fill that gap where I don't need to know all that legislation and stuff but I can still pick my own stocks and term deposits, could just work.

I have one super fund in cash and bonds only. For a 100k balance the fee is $552 p/a all in, statements and all. I have to weigh up the pros and cons between the 3 ways I could handle my super. I am still a bit undecided on this.

 

[Julia]

Thanks for the explanation Bill. I quite get what you're saying, but I'd suggest that in reality the compliance factor has been inflated to be way more scary than it actually is. If you have a simple, sole purpose SMSF and don't attempt any fancy variations of the basic tenet of the reason for the Fund's existence being to provide retirement benefit for the members, you wouldn't have any difficulty.

The ATO has a SMSF section to which you can subscribe and receive emails which clearly outline any changes in the rules.

I wonder if you're allowing your look at Esuperfund and the restrictions it imposes to colour your view about the whole SMSF idea. All a SMSF represents, is the opportunity to hold assets in a tax advantaged environment.

There are individual accounting firms who will do the setup and then the annual tax return and audit for a very reasonable fee, and you would have complete autonomy to invest as you wish. None of the nonsense So Cynical has been describing such as waiting weeks for confirmation of a trade. (apologies, SC, if I've misunderstood what you're saying here, but it's obviously a less than satisfactory situation.)

I don't mean to be trying to persuade you toward a SMSF, Bill, but am just trying to suggest you may be somewhat exaggerating the difficulties of running your own fund. I've been doing it for many years now and, as long as clear records are kept, it's no more onerous than investing in a less tax-advantaged environment.

 

[So_Cynical]

Just did a quick check on your 3 stocks. It appears as though GFF has in fact dropped the most in 12 Months and the dividends have been chopped by half, did you top up or exit on this one? What is your plan with it?

I didn't average again into GFF because i already had 2 parcels and only had enough funds for the 2 averaged downs ive taken into ABC and SGP....GFF will be my next buy as soon as enough funds are available.

At the moment i have 2 parcels of each stock and will limit myself to 3.

By the way, how is the new trading platform on OZ Super? I really like the way they are going forward with that as I don't really want to start my own SMSF. Seems like a great way to do it yourself with no accounting hassles. Is it up and running and have they fixed their service up yet? Cheers.

OZ Super still haven't switched over to their new trading platform but they do have a new - better web site...documenting execution and updating account activity is still woefully slow, so can only get better.

 

[Bill M]

I don't mean to be trying to persuade you toward a SMSF, Bill, but am just trying to suggest you may be somewhat exaggerating the difficulties of running your own fund. I've been doing it for many years now and, as long as clear records are kept, it's no more onerous than investing in a less tax-advantaged environment.

I do have a couple more important questions. I believe 2 persons must be listed as the funds trustees. In my case it would have to be myself and my wife and it can't be anyone else. She is absolutely clueless when it comes to any financial matters and she relies totally on me. Does she as a trustee actually have to do anything other than sign where I ask her too? What if something was to happen to me, how could she run the fund and what could she do about that? This part worries me a bit.

 

[Bill M]

OZ Super still haven't switched over to their new trading platform but they do have a new - better web site...documenting execution and updating account activity is still woefully slow, so can only get better.

Let us know when it is all working properly and if you are happy with it. By the way (not a recommendation) have you taken a close look at the high dividend yield ETF code "SYI". Might be an easier way to add to your holdings and seeing you are investing long term it might be worth a look, cheers.

 

[jorgon]

I do have a couple more important questions. I believe 2 persons must be listed as the funds trustees. In my case it would have to be myself and my wife and it can't be anyone else. She is absolutely clueless when it comes to any financial matters and she relies totally on me. Does she as a trustee actually have to do anything other than sign where I ask her too? What if something was to happen to me, how could she run the fund and what could she do about that? This part worries me a bit.

Hi Bill M

Whether or not you need two persons to be trustees, depends on whether you have human trustees or a corporate trustee.

If you have human trustees, then it is true there must be at least two trustees. In that case if you are the only member of the fund, the other trustee can be anybody you like and does not have to be a member of the fund (but must not be your employer unless you are related to that person). If your wife is a member of the fund, then it should be your wife.

If you have a corporate trustee and you are the only member of the fund, then you can run it on your own (you could be the sole director). Alternatively if you prefer you could have a second director who does not have to be a member of the fund (but this must not be your employer unless you are related to that person). If your wife is a member of the fund, then she should be the second director.

If your wife is a trustee of the fund or a director of the corporate trustee, she would have legal duties to ensure that the fund continued to comply with the superannuation laws, and she would have to act honestly and diligently. These duties cannot be delegated. If you think these duties would be too much for her, your option would be not to have her as a member of the fund.

As for management of the fund if anything happened to you, the easiest way to deal with this in advance of this event is to grant an Enduring Power of Attorney to someone you trust. This would appoint someone to act as trustee in your place if you became unable to continue this role. This could not be on a paid basis but the attorney (to whom you grant the power) would be able to put the day to day control of the fund into the hands of a professional if you had not already done this.

And if you are the sole member of the fund and you have a second trustee or director as mentioned above, the attorney would act with that that person after you are unable to do so. Hence you would have two trustees looking after your fund during your period of incapacity.

There are also a number of available alternatives to ensure that the fund is dealt with in the way you wish in the event of your death.

I have written a series of articles on my web site (below) which attempt to clarify some of these matters.

 

[Julia]

I do have a couple more important questions. I believe 2 persons must be listed as the funds trustees. In my case it would have to be myself and my wife and it can't be anyone else. She is absolutely clueless when it comes to any financial matters and she relies totally on me. Does she as a trustee actually have to do anything other than sign where I ask her too? What if something was to happen to me, how could she run the fund and what could she do about that? This part worries me a bit.

Jorgon has essentially answered your question, Bill.
I started my fund with the two individual trustees. The second person played no active part in any of the investment decisions and effectively read through the Investment Strategy before signing off on the tax return. I had a Power of Attorney from her to sign day to day stuff but the POA is not acceptable for the annual tax return.

For reasons I won't go into here, I lost confidence in that second trustee and therefore have recently completed the switch to corporate trustee where I'm the sole director. I'd strongly advise anyone setting up a new SMSF to go for the corporate trustee structure.

I completely understand your concern about what would happen if you lose capacity, temporarily or permanently. As Jorgon has suggested, I have an Enduring POA which resides with three people, acting together. They have various strengths and this EPOA includes responsibility for not just financial matters but healthcare etc.
Only one of the three has any financial know how, so the EPOA instructs that they must make their decisions in conjunction with advice from my accountant.

This is not a perfect solution but it's about the best I can do.

Do you have a financially savvy friend who is absolutely trustworthy who would be prepared to take on the role of attorney in the unlikely event you were to lose capacity?

 

[Bill M]

I didn't average again into GFF because i already had 2 parcels and only had enough funds for the 2 averaged downs ive taken into ABC and SGP....GFF will be my next buy as soon as enough funds are available.

.

I think your luck is in, check this out.
---
GOODMAN Fielder plans to raise $259 million through an equity raising at 45 cents a share, roughly 24 per cent below its last traded price.

Full Story Here
---

If I were you I would definitely take this on even if you flogged them shortly after allocation.

It will be interesting to see how AustSuper handles the paperwork for this, let us know how it goes. Good Luck.

 

[skc]

I think your luck is in, check this out.
---
GOODMAN Fielder plans to raise $259 million through an equity raising at 45 cents a share, roughly 24 per cent below its last traded price.

Full Story Here
---

If I were you I would definitely take this on even if you flogged them shortly after allocation.

It will be interesting to see how OZ super handles the paperwork for this, let us know how it goes. Good Luck.

It is NOT a good thing when company need to offer such large discount to issue shares.

Loss making companies issuing shares at deep discount rarely produce long term positive outcomes. GFF isn't going through a liquidity issue... it is going through structural issues.

And the offer is renounceable which means there probably won't be any over-subscription available. At least one could sell the rights straight away.

 

[Bill M]

It is NOT a good thing when company need to offer such large discount to issue shares.

Loss making companies issuing shares at deep discount rarely produce long term positive outcomes. GFF isn't going through a liquidity issue... it is going through structural issues.

And the offer is renounceable which means there probably won't be any over-subscription available. At least one could sell the rights straight away.

Yes totally agree however he can make a simple quick buck out of this by selling soon after, I've done it many times myself.

 

[skc]

Yes totally agree however he can make a simple quick buck out of this by selling soon after, I've done it many times myself.

I am willing to bet you two loafs of bread that GFF will trade below the rights price by the time new shares are issued.

Whatever profit So_C can get from selling the rights will be negated by the loss in his core holding (imho).

Worst of all, GFF missed out on today's run!

 

[So_Cynical]

I think your luck is in, check this out.
---
GOODMAN Fielder plans to raise $259 million through an equity raising at 45 cents a share, roughly 24 per cent below its last traded price.

Full Story Here
---

If I were you I would definitely take this on even if you flogged them shortly after allocation.

It will be interesting to see how AustSuper handles the paperwork for this, let us know how it goes. Good Luck.

I am willing to bet you two loafs of bread that GFF will trade below the rights price by the time new shares are issued.

Whatever profit So_C can get from selling the rights will be negated by the loss in his core holding (imho).

Worst of all, GFF missed out on today's run!

I'm not 100% sure but i don't think im allowed to participate in rights issues etc so i think im screwed...i have to say that i didn't give rights issues and other corporate actions that i cant participate in the attention i should have.

---------------

I'm with SKC on the down side...in this market GFF could hit 25 or 30 CPS as the market will consider this capital raising to be the equivalent of hitting the panic button.

I mean what company board/management in its right mind would dare do a cap raising now...its crazy!..and to make matters worse i did an average down last Monday at 62 or 63 CPS.

I got this wrong, terribly wrong....my worst stock selection since APN. 2 doozys there.

 

[Bill M]

:
I got this wrong, terribly wrong....my worst stock selection since APN. 2 doozys there.

Don't beat yourself up too much over it, we have all had duds, we have to move on. The real question is what are you going to do with GFF now?

 

[skc]

I'm not 100% sure but i don't think im allowed to participate in rights issues etc so i think im screwed...i have to say that i didn't give rights issues and other corporate actions that i cant participate in the attention i should have.

I actually thought about this the other day before the GFF halt. It's a renounceable issue so you 'should' see GFFR as a tradable instrument but your account seems to have some unusual limitations.

There are talks that GFF should be broken up and that might give some short term boost to the share price... who knows.

http://www.theaustralian.com.au/bus...-up-on-the-cards/story-fn7rgef9-1226148490943

I will buy a loaf of their bread tonight just to help you out.

 

[So_Cynical]

I think your luck is in, check this out.
---
GOODMAN Fielder plans to raise $259 million through an equity raising at 45 cents a share, roughly 24 per cent below its last traded price.

Full Story Here
---

If I were you I would definitely take this on even if you flogged them shortly after allocation.

It will be interesting to see how AustSuper handles the paperwork for this, let us know how it goes. Good Luck.

Good news...of sorts.

Turns out i do get to participate in the GFF Rights issue, i got a letter today from AustSuper's share registry & corporate actions team dated 30 Sept, so only a couple of days after the announcement....good to see the share registry & corporate actions team are on the ball.

I just have to fill in a basic form stating how many shares i want and as long as im withing the ASX200 option rules i can participate...so looks like ill be taking my third and absolutely last average down into GFF, as i plan to participate fully in the rights issue.

 

[So_Cynical]

AustSuper will launch its new Member Direct investment option on the 28th of November, i put together a little montage of some of the features etc and there's links to the PDF and site below.

AustSuper are wisely marketing this as a low cost, no paperwork, no hassle alternative to SMSF's and at $15 a month, with low brokerage and real time trading and term deposits...i reckon this will be very popular.

The PDF below has screen shots and a good guide to how the trading platform will work...looks quite good.

http://www.australiansuper.com/memberdirect

http://www.australiansuper.com/memberdirectguide

http://www.australiansuper.com/~/media/files/Guides/MemberDirect_Oct11_WEB_final.ashx
~

 

[Boggo]

AustSuper are wisely marketing this as a low cost, no paperwork, no hassle alternative to SMSF's and at $15 a month, with low brokerage and real time trading and term deposits...i reckon this will be very popular.

Correct me if I am wrong, it would cost $44 to buy $20000.00 of stock, your stop loss would not work on the day you buy and you can only trade the top 300 of the approx 1960 stocks on the ASX.

I wouldn't think that it is either cheap or potentially popular unless I am missing something.

 

[So_Cynical]

Correct me if I am wrong, it would cost $44 to buy $20000.00 of stock, your stop loss would not work on the day you buy and you can only trade the top 300 of the approx 1960 stocks on the ASX.

I wouldn't think that it is either cheap or potentially popular unless I am missing something.

A $20000 trade thru commsec would cost $29.95 so $44 in comparison isn't outrageous...how many people are actually using stop loss orders to trade inside their SMSF's i would think that its not very common :dunno: certainly not the norm for Esuper and other cheap DIY type account holders i would think.

For people wanting to aggressively trade via a SMSF, AustSuper is not really going to suit, however it will suit people wanting a greater level of control and flexibility with a limited budget...personally i would prefer at least the 500 stocks of the all Ords to be available and in time they probably will move down that road.

$180 per year in fees and $220 in brokerage for 100K worth of buys/sells is not alot to pay when compared to the 2 or 3K some people annually pay for their SMSF's

 

[Bill M]

I am willing to bet you two loafs of bread that GFF will trade below the rights price by the time new shares are issued.

Just did a check on these, it briefly went down to 42c then closed on that same day at 46.5c. This Friday however, they closed at 54c, not a bad gain for such a short period.