Australian (ASX) Stock Market Forum

Self Managed Super

So would it be your preference for the compulsory contributions to Super to be abolished, Sir O?

If that were to happen, how likely do you think it is that the average Australian would do anything about providing for their own retirement?

Not that I think my preferences would ever be taken into account Julia... but quite simply...no. However the current system could use a lot of changes. Its too inflexible, and far too much under the power of the legislators and advisers to whichever government is in power. I mean this is our money right? Garnished from our salary for our future and yet the amount of control that most people have over it is minimal to non existent.

Some will argue that the government need to have control because they are dealing with macro effects, with the "Big Picture" but I disagree. One of the things I read about recently was that a potential change being considered is to make further limitations to the ability to draw your super as a lump sum...because the average australian draws it, spends it, and they are then sucking on the public funded teat. There has even been discussion that the government should make it mandatory that all super funds (and this would apply to your smsf as well) at pension phase invest a minimum 50% into an annuity stream investment. An Annuity FFS!! You put half a million into an annuity to last you twenty years and what is left at the end? Nada Zilch diddly, bubkiss. You put a half million into property for twenty years or a share portfolio and it will provide you with an income, increase in value and still be there at the end of twenty years!!

Why is this being discussed? Because you are right Julia, the average Australian wouldn't do anything to provide for their financial future. Remember that bit in one of the first posts in Newbie lessons. Only 8% of people ever retire comfortably. That number is probably not going to change in a hurry.
You know many people simply won't. So what other system can you suggest to ensure the provision of retirement income does not fall on the taxpayer, who is already providing more than they should in pensions for those who have failed to save.


Well I hate to sound like a broken record Julia, but I truly think that education is the key. I'd love it if even ten per cent of the budget currently spent on advertising superannuation and financial products and packaging were used to actually teach people..FOR FREE...the things they need to know for their financial security.

I'd also like to see some flexibility and level of control way in excess of the current system. Given our nanny state mentality however... I seriously doubt I'll get any of those things.

My two cents

Cheers

Sir O
 
I completely agree with what you say, Sir O, except that I'm not sure that more education would make much difference. I've noticed that quite an astonishing number of people simply don't want to think about retirement and the funding thereof in much the same way as they don't want to think about death and making a Will, having a POA etc.

Don't know whether it's part of the Australian "she'll be right" attitude or whether it's more universal.

I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff. Just don't want to think about it.

And there's also that large chunk of the population who - if they think about it at all - consider that the government pension will do them just fine. After all, they've paid their taxes, haven't they? So the gummint will look after them when they're old.
 
I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff. Just don't want to think about it.

It's amazing isn't it. People as a whole spend so much time earning their money, and very little putting it to good use.
 
You raise a good point Jono. Our system is geared towards the lowest common denominator, in order to protect the less educated/able/well informed. We do need a super system to protect those, but in the mix of all that, those who could manage their own affairs better are lumped into the same system.

On the other hand, a lot of experts are now spectacularly bankrupt.
 
I completely agree with what you say, Sir O, except that I'm not sure that more education would make much difference. I've noticed that quite an astonishing number of people simply don't want to think about retirement and the funding thereof in much the same way as they don't want to think about death and making a Will, having a POA etc.

Don't know whether it's part of the Australian "she'll be right" attitude or whether it's more universal.

I have friends who are bright, smart in most ways, successful in their chosen careers, but just have a blank wall when it comes to financial stuff. Just don't want to think about it.

And there's also that large chunk of the population who - if they think about it at all - consider that the government pension will do them just fine. After all, they've paid their taxes, haven't they? So the gummint will look after them when they're old.

So lets have some of those adverts like they do for the smokers. Show Grandad and Grandma Grey nomadding around the country in a tricked out camper--->these people thought about their financial future

Show Grandad with fleas running through his beard eating cold baked beans straight from the tin. ----> he didn't plan for his future and can barely scrape though.

Please go along to your free information seminar with Sir O and learn for yourself how to be financially secure.

Lets get some shock tactics like they use to educate people not to drink and drive, smoke, take drugs or any other destructive behaviour.

Of course I'm dreaming aren't I...it's much more fun (and profitable for the large corporations) to keep the sheeple dependent upon you.

Cheers

Sir O
 
So lets have some of those adverts like they do for the smokers. Show Grandad and Grandma Grey nomadding around the country in a tricked out camper--->these people thought about their financial future

Show Grandad with fleas running through his beard eating cold baked beans straight from the tin. ----> he didn't plan for his future and can barely scrape though.

Please go along to your free information seminar with Sir O and learn for yourself how to be financially secure.

Lets get some shock tactics like they use to educate people not to drink and drive, smoke, take drugs or any other destructive behaviour.

Of course I'm dreaming aren't I...it's much more fun (and profitable for the large corporations) to keep the sheeple dependent upon you.

Cheers

Sir O

Studies have shown that these shock tactics don't actually work too well... they havnt been effective in reducing smoking or alcohol in society, ever!

Education would be a good idea, but I would still doubt the capacity of most individuals to understand the bulk of the things behind investment, and how super actually works. Besides, the super firms makes things way to difficult to understand anyway... like cash investments arent actually 100% cash investments :confused::confused:

Perhaps a better solution would be implementing this education into the high school curriculum, instead of learning polynomials and integration in senior mathematics, perhaps some basic education into finances and investment would be a better options.

My high school education is essentially useless in the real world. Sure engineers and the like would need the knowledge of how to integrate ect ect, but what the heck am I going to use those skill now? IMO a more practical education in school would be the most efficient thing to do...
 
Studies have shown that these shock tactics don't actually work too well... they havnt been effective in reducing smoking or alcohol in society, ever!

Education would be a good idea, but I would still doubt the capacity of most individuals to understand the bulk of the things behind investment, and how super actually works. Besides, the super firms makes things way to difficult to understand anyway... like cash investments arent actually 100% cash investments :confused::confused:

Perhaps a better solution would be implementing this education into the high school curriculum, instead of learning polynomials and integration in senior mathematics, perhaps some basic education into finances and investment would be a better options.

My high school education is essentially useless in the real world. Sure engineers and the like would need the knowledge of how to integrate ect ect, but what the heck am I going to use those skill now? IMO a more practical education in school would be the most efficient thing to do...


Actually I've said that before it should be taught in high schools, but (and I think it was Julia) said that we already place too much demand upon our teachers to raise our kids (and I don't disagree).

I have actually given a couple of talks at my daughters school - stuff for teens so that they can understand this sort of stuff and I had the teachers coming up to me saying "I never knew that".

I spend a fair bit of time doing presentations and I have certainly heard the comment "Why don't they teach this at school" before.

Oh well, still think education rather than nanny state BS is the way to go.

Cheers

Sir O
 
I'm part of a mentoring programme in the local schools and we're currently discussing including a 'basic financial management' option for probably first year high school students, so it's good to have this idea endorsed.
 
I'm part of a mentoring programme in the local schools and we're currently discussing including a 'basic financial management' option for probably first year high school students, so it's good to have this idea endorsed.

What topics are you planning to teach?

Sir O
 
Actually I've said that before it should be taught in high schools, but (and I think it was Julia) said that we already place too much demand upon our teachers to raise our kids (and I don't disagree).
Sir O

Let the ignorant do the teaching?? The problem lies in that the current generations as previously discussed are both ignorant and uneducated in the matter of finances. So how are they going to go about teaching their children in the first place??
 
What topics are you planning to teach?

Sir O
Planning and Budgeting - goals/saving and spending/money planning

Getting Started - opening an account, everyday banking, different ways to pay

Understanding Paperwork, including statements, bills etc, record keeping

Credit Providers, credit and credit cards, loans

Dealing with Debt

Rights and Responsibilities

Any further suggestions are welcome.
 
Let the ignorant do the teaching?? The problem lies in that the current generations as previously discussed are both ignorant and uneducated in the matter of finances. So how are they going to go about teaching their children in the first place??

Jono...ever hear of teacher resources? How about textbooks? Slides? Presentation materials? Video's? Webinars? Practical examples?

Nah you're right they wouldn't be useful at all.

Cheers

Sir O
 
Planning and Budgeting - goals/saving and spending/money planning

Getting Started - opening an account, everyday banking, different ways to pay

Understanding Paperwork, including statements, bills etc, record keeping

Credit Providers, credit and credit cards, loans

Dealing with Debt

Rights and Responsibilities

Any further suggestions are welcome.

I'd go debt v liability rather than just debt - they are two different things

appreciation versus depreciation - As in when you buy are car....and when you buy a house.

cyclical nature of the economy

maybe a little risk management strategy.

Cheers

Sir O
 
My son had a brilliant accounting teacher in year 11 and 12. This guy was apparently extremely wealthy, through multiple investments he had made, mind you, he wasnt married or had children either (maybe there is a lesson to that!:eek:) so he didnt have to work at all. But he loved teaching and wanted to share the knowledge. He was also a little strange though, I think he heard voices!

Debt? I'd say, having good debt rather than bad debt.
 
Debt? I'd say, having good debt rather than bad debt.

You've been listening to Miyasaki too much.

One is debt...and one is liability.

We are conditioned from a young age to avoid "debt" in all it's forms. Debt is bad..ooo scary debt. Liability is different.

Cheers
Sir O
 
I'd go debt v liability rather than just debt - they are two different things

appreciation versus depreciation - As in when you buy are car....and when you buy a house.

cyclical nature of the economy

maybe a little risk management strategy.

Cheers

Sir O
Good suggestions, thank you, if there turns out to be time. If it happens at all (and that's far from certain given a rather indifferent response so far) it will be maybe five x 45 minute workshops.

If we can just get these kids to understand basic budgeting we will be doing something useful!
 
Hi Julia,

The one thing that stands out from my earliest financial learning is

" the power of compound interest"

I've got an idea it might even be a Norman V Peale book

It was shown to me and you dont need to overly complicate it by talk of inflation and tax.

to a young mind, just the results of saving 10% and allowing Compound interest to take effect, the numbers are impressive.

and so are the results, especially if applied to dividend producing stock

I did this in my early years, and while it was only one outcome, if if I had not
done so, could not have achieved financially what I have ( near independance)

I know it will sound terribly crude to ASF members, but remember most will never be that literate.

KISS

saw a story on Landline about a 94yr old farmer, an original Westfarmers stock holder, always reinvested divs, worked hard and live simply, his WES stock was worth $19m
 
Hi Julia,

The one thing that stands out from my earliest financial learning is

" the power of compound interest"

I've got an idea it might even be a Norman V Peale book

It was shown to me and you dont need to overly complicate it by talk of inflation and tax.

to a young mind, just the results of saving 10% and allowing Compound interest to take effect, the numbers are impressive.

and so are the results, especially if applied to dividend producing stock

I did this in my early years, and while it was only one outcome, if if I had not
done so, could not have achieved financially what I have ( near independance)

I know it will sound terribly crude to ASF members, but remember most will never be that literate.

KISS

saw a story on Landline about a 94yr old farmer, an original Westfarmers stock holder, always reinvested divs, worked hard and live simply, his WES stock was worth $19m

hello,

spot on awg, combined with living within your means, getting a good income and presto life is grand

thankyou
associate professor robots
 
Thanks, awg. Yes, compound interest is like magic if you start young.
 
Just discovered this SMSF forum and will visit it regularly as it seems to discuss the things I am interested in. As for "The Power of Compound Interest" (by Norman Vincent Peale - nice one :), there is the very simple Rule of 72: divide the rate of interest you receive into 72 to give you the number of years it would take to double your money. 7% interest? You double your money in a little over 10 years!

Always assuming that you want to self-manage your super (and I know that far too many people want to delegate all that responsibility), and further assuming that you can get a no-frill SMSF reporting and audit service (which is mandatory) for around $1,000 or less, and that an industry fund charges 1% of your account balance, then a super account with a balance of $100,000 would cost you no more to administer as a SMSF. It would require some more involvement on your part but it would also give you a lot more discretion to decide how your super savings are invested.

If I were still in the workforce and on a high salary which would mean that my employer would have to pay 9% of my gross salary into a fund every month, I would definitely set up my own SMSF and have them pay their contribution into it rather than some industry fund over which I have absolutely no control.

Administering your own SMSF is not rocket science! Yes, you need to read up on a few things but there is plenty of literature (including "Superannuation for Dummies" :)
 
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