Hi Kayman - back from holidays
Welcome back Sir O!
I can sense the break has replenished you with the additional energy needed responding to the posts here in this forum. A service many here appreciate, I am sure!
So not protecting your portfolio cost you 26% of your superannuation net wealth. As opposed to a cost of 6%-10%for "Insurance" purposes.
However you need to consider the following. If you had hedged, hedging your portfolio generates funds. (The instrument when sold) you then have these funds to invest into the market. (At guess what...close to the bottom of the market). These funds then enjoyed an almost 50% increase. To demonstrate I went and found a client who joined the firm in January '04. During the same period of time as yourself the client returned 142.53%*
*No pension deductions but result is net of fees.
Your 1.7 ish million therefore would have been roughly 2.423M. (Before deductions) See the difference not protecting your assets made to your level of return? Kayman - look at the date....by now the majority of the damage is done, you've had almost a year of falling share market. Ouch! Kayman - I would also have told you not to put all your money into a TD at that time. We started our major purchasing for clients in November '08.
To be precise, the worth of my investment portfolio in the allocated pension fund cost me 26.65%. On 12 Oct 07 my total financial portfolio was worth about $2.3 million, on 08 Oct 08 1.7 million. As of today it is still hovering around in the high $1.6 million mark.
With my e-mail message dated 09 Oct 08, I basically forced my adviser to comment on the then financial situation as he never contacted me on his own volition in relation to the crisis.
Similar to Julia I will interpret for you given my own perspective.
Never trust a broker when he speaks about other asset classes. ,
<cut to shorten post>
Go visit the property thread for that. Now Kayman, show me where the property cycle is bearish and compare that to the asset class of shares for me...
The return of my Vanguard Property Security Index Fund from 01/10/04 to 31/08/10 was minus 4.48%.
<cut to shorten post> Repeat after me. Managed funds are good. I like managed funds. I like paying fees.
I know your position with respect to managed funds and appreciate your simple rule "the more people between you (me) and the asset - the lower your (my) return." In order minimising withholding tax liabilities I need to reinvest the procceeds of my wound-down pension fund fairly quickly. As far as I am concerned I have no other option but to look at term deposits or bonds. These type of investments are easy, straight forward and even I can follow and understand. Once or if I ever get the financial savvy required I then will look at more sophisticated financial products.
Alternatively, an active share broker may also be worthwhile to consider, this would eliminate the number of people between me and the assets. I know of a 'high quality' firm in Brisbane who take on clients with a minimum of $1 million.
Hey what about other asset classes since Term Deposists are so bad. What about property! What did it do during any ten year period? I'll refer you to the attached chart again Kayman.
As mentioned above, the return of my Vanguard Property Security Index Fund from 01/10/04 to 31/08/10 was minus 4.48%.
If you aren't sure exactly what he's done here Kayman - it's a sales technique. Recency. It's to do with the fact that we remember more clearly the last thing we hear or read. What was the last thing he said? I reiterate our very strong view not to make any changes to your pension portfolio. They say repetition is very important when conditioning people.
My adviser is obviously well trained to take (legally) full advantage of those who are not familiar to this game (industry).
<cut to shorten post>
The first thing is education. It seems difficult and insurmountable because you simply don't know what to do. Keep reading and asking questions Kayman. (Notice what my Recency comment is Kayman?)
I feel pretty stupid now.
Well Sir O, you made it more than clear that I (again) have been had and am gradually going to do something about it. Education takes a long time, especially if one doesn't know which diretion to take in the jungle of investments opportunities.
One of the forum contributers has contactet me, giving me support and advice of which I am most grateful; I shall keep in touch.
Without intention and because it happen only recently, I omitted in previous posts that I am no longer a resident of Australia and reside abroad. As a non-resident, I am no longer liable for capital gains tax upon the sale of any shares purchased after the date you became a non-resident for tax purposes. My cash account however attracts a withholding tax.
I am presently in contact with my tax accountant and he confirmed that:-
1. My particular wrap account can only be accessed by an registered financial adviser and can not access myself.
2. The investment products (which make up my Allocated Pension Fund now renamed Account Based Pension fund) themselves are not tied to my current wrap account, I could transfer them to another administration service, such as Macquarie, MLC etc. But those administration services are more expensive and still would require an adviser to access the account.
3. There are self-managed wrap accounts available but he is unsure if my existing assets can be transferred and the fund managers would agree to that (because of prior adviser/fund manager 'understanding'?).
4. My adviser has used wholesale investment funds, which I can only purchase on my own if I have more than $500,000 for each investment. If I were to wind-down my pension fund I would have to redeem these funds as well. Having said that, to sell the assets and withdraw would incur total costs of $30.50 x 12 = $366.00, plus any interest penalty on the term deposit (assuming I break it before March next year).
5. As a non-resident I am precluded for running a self managed super fund SMSF).
6. Tell (adviser) to reduce adviser fee or you will change funds.
7. Consider an industry fund which is non profit.
Oh boy, got to go - my head is spinning.
Thanks for your comments, support and suggestions.
Cheers...Kayman.