Superannuation direct investing outside of SMSF

prawn_86 · 1 January 2013

Hi All,

There seem to be a few superannuation providers now allowing you to directly invest your super, which for those of us who are young with small super balances it makes sense to use over a SMSF.

I was wondering if members had any opinion as to what service is currently better? I know both ING and AustSuper both offer these products and i think ANZ offers something simlar also but i dont know that you can buy specific stocks with them.

Thoughts?

Bill M · 1 January 2013

I am thinking alone the same lines as I don't have a SMSF either. I like the ING living super product. With the ING one you seem to have a lot of choice. I like what it says here:

---

No messy paperwork, establishment fees or compliance hassles
Real time share trading with S&P/ASX200 Shares, Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs)
Extensive share market research

http://www.ingdirect.com.au/super_and_retirement/living_super.htm

---

I think the fee for using this facility is $180 flat p/a plus brokerage. The only thing is I am not sure hybrids, floating rate notes and convertible preference shares fit into ASX200 shares. They may be excluded.

It seems to give more flexibility than Aust. Super but I think so_cynical would be better writing about that as he is about the only person I know of that is with them.

Anyone else have an opinion?

So_Cynical · 1 January 2013

Bill M said:
I think the fee for using this facility is $180 flat p/a plus brokerage. The only thing is I am not sure hybrids, floating rate notes and convertible preference shares fit into ASX200 shares. They may be excluded.

It seems to give more flexibility than Aust. Super but I think so_cynical would be better writing about that as he is about the only person I know of that is with them.

Ok so i found a list of approved security's for ING super..its a nice list including pretty much all the ETF's and all the good LIC's even little old CTN a small cap, small cap fund...ill do a comparison.

---

AustSuper

Can invest 80% of total account balance
20% limit in any one stock
ASX 300 stocks and all iShares ETF's
$180 in annual fees + brokerage
http://www.australiansuper.com/memberdirect

----------

ING Super

Can invest 50% of total account balance
20% limit in any one stock
ASX 200 and looks like all the ETF's and Most of the LIC's
$180 in annual fees + brokerage
http://www.ingdirect.com.au/pdf/Shares_EFTs_and_LICs.pdf

The (ING) list below is impressive, but the 50% limit is not..better choice but less money to control.
~

WilkensOne · 1 January 2013

Hostplus are also going to be releasing their own product along the lines of of Ing and AustSuper, said to be coming out January.

I have to say that AustSuper sounds like the better option because of the 80% investment option, I have been looking at moving my super over to them for a little while plus $15 brokerage isn't bad!

skc · 1 January 2013

So_Cynical said:
Ok so i found a list of approved security's for ING super..its a nice list including pretty much all the ETF's and all the good LIC's even little old CTN a small cap, small cap fund...ill do a comparison.

---

AustSuper

Can invest 80% of total account balance

20% limit in any one stock

ASX 300 stocks and all iShares ETF's

$180 in annual fees + brokerage

http://www.australiansuper.com/memberdirect

----------

So_C,

With Australiansuper, do you know if you pay the usual management fee for the portion of funds under memberdirect?

E.g. Your superbalance is $100k and the usual ASF fee is 1.2% ($1200 per year). You decide to use $80k for direct investments. Does it mean you only pay 1.2% on the remaining $20k?

Thanks

Julia · 1 January 2013

skc said:
E.g. Your superbalance is $100k and the usual ASF fee is 1.2% ($1200 per year).
Thanks

If you're paying a fee of $1200 on just $100K, you'd be better off having your own SMSF.
Perhaps I'm misunderstanding the annual fee. Would be interested in clarification.

skc · 1 January 2013

Julia said:
If you're paying a fee of $1200 on just $100K, you'd be better off having your own SMSF.
Perhaps I'm misunderstanding the annual fee. Would be interested in clarification.

Julie, I made up that 1.2% for illustration purpose only.

The real number is 0.6% I think plus some non-size related admin fee ($1.5/wk). So with $100k balance it's around $680.

http://www.australiansuper.com/superannuation/what-we-offer/fees-and-costs.aspx

So_Cynical · 2 January 2013

skc said:
So_C,

With Australiansuper, do you know if you pay the usual management fee for the portion of funds under memberdirect?

E.g. Your superbalance is $100k and the usual ASF fee is 1.2% ($1200 per year). You decide to use $80k for direct investments. Does it mean you only pay 1.2% on the remaining $20k?

Thanks

The $180 is a flat fee ($15 per month - Portfolio administration fee) when you choose to use the members direct (Direct shares) option.

skc · 2 January 2013

So_Cynical said:
The $180 is a flat fee ($15 per month - Portfolio administration fee) when you choose to use the members direct (Direct shares) option.

I know the $180 is a flat annual fee. But is that on top of the 0.6% annual fee of your super balance?

So_Cynical · 2 January 2013

skc said:
I know the $180 is a flat annual fee. But is that on top of the 0.6% annual fee of your super balance?

Yes on top of = extra

So using the direct shares option adds $180 to the total fees..even if you only do 1 trade a year.

Looking at my statement my total fees last year were around $260 with brokerage and ASX fees included (12 orders or so) Life and TD insurance was $210 (not a believer in life etc insurance)

My statement shows my members direct fees at only $90 so not quite sure what's going on with that as i have a brokerage charge from July 2011 :dunno:

skc · 2 January 2013

So_Cynical said:
Yes on top of = extra

So using the direct shares option adds $180 to the total fees..even if you only do 1 trade a year.

Looking at my statement my total fees last year were around $260 with brokerage and ASX fees included (12 orders or so) Life and TD insurance was $210 (not a believer in life etc insurance)

My statement shows my members direct fees at only $90 so not quite sure what's going on with that as i have a brokerage charge from July 2011 :dunno:

OK thanks.

It appears that the 0.6% investment management fees apply only to those pre-mixed investment options (like "balanced" or "International fixed interest" etc.

prawn_86 · 2 January 2013

Thanks everyone, i'm still to decide which way i will go

Julia · 2 January 2013

I don't like the fee basis of % of capital and can't really see how they can justify it. I suppose the assumption is the more capital you have the more transactions you will make.
At 0.6% if you had just $500K invested that's $3000 before any brokerage. That's more than most accountants would charge for annual tax return and audit etc on a SMSF.

ESuperfund offer free set up and annual tax return and audit for just $699.

prawn_86 · 2 January 2013

Julia said:
I don't like the fee basis of % of capital and can't really see how they can justify it. I suppose the assumption is the more capital you have the more transactions you will make.
At 0.6% if you had just $500K invested that's $3000 before any brokerage. That's more than most accountants would charge for annual tax return and audit etc on a SMSF.

ESuperfund offer free set up and annual tax return and audit for just $699.

I have 30k in super so $700 is over 2% plus the time etc needed. If i go with ING i will buy 3 stocks which will come to $240 and then probably leave the rest in either term deposits or their balanced fund which has no charge. So it comes to less than 1% on my capital

Julia · 2 January 2013

prawn_86 said:
I have 30k in super so $700 is over 2% plus the time etc needed. If i go with ING i will buy 3 stocks which will come to $240 and then probably leave the rest in either term deposits or their balanced fund which has no charge. So it comes to less than 1% on my capital

Sure. Makes sense when super balance is low. I was just pointing that it doesn't make sense if the balance is larger.

sydboy007 · 4 January 2013

I was with Aust Super for the member direct product. After 6 months I found it of limited value.

It's Ok if you want to invest in ETFs or top 300 companies. The TDs on offer were mid raange, cash rate quite low. Trades were expensive, moving money between the member direct account and you standard super account was done once a week on Monday and you needed to have the transfer in place by Sunday night.

So much happier to have set up my own SMSF via esuperfund. I now have a good array of ILB, shares, etfs, listed interest securities and cash earning 5% for the next 6 months.

I would hazard a guess that if you have a super balance of 100K then a cheap SMSF like what esuperfund offer you can work out saving you money compared to a lot of retail and some industry super funds. Once you balance gets up to 150K or more then I would say you are well ahead as you have a fixed cost base rather than the leach mentality of the super industry based on a % of assets under management. Biggest Government sponsored rort I have ever seen.

If you have an interest in your super, and are willing to take on the responsibilities of being a trustee then I say go for it via a SMSF. Your super will be you biggest asset outside the family home so it's best you start growing it as early as you can.

Trembling Hand · 4 January 2013

sydboy007 said:
If you have an interest in your super, and are willing to take on the responsibilities of being a trustee then I say go for it via a SMSF. Your super will be you biggest asset outside the family home so it's best you start growing it as early as you can.

Thats the biggest mistake with super. Why grow something and make it your second or even first biggest investment with something so friggin restricted?

A cent hasn't gone into my super for 5 years now, from anywhere. And I cannot see that changing.

prawn_86 · 4 January 2013

Trembling Hand said:
Thats the biggest mistake with super. Why grow something and make it your second or even first biggest investment with something so friggin restricted?

A cent hasn't gone into my super for 5 years now, from anywhere. And I cannot see that changing.

While i agree for some of us it cant be helped. I do not contribute personally but with employer contributions it is getting to a point where i need to take control of it.

Long term plan for me is to start a SMSF in 4 or 5 years and then just buy some land/property so we have something physical to fall back on based on a worst case scenario when we retire. That way the government and fund managers will be less likely to meddle with it when under a SMSF

DocK · 4 January 2013

Definately makes sense for us as we used the super accumulated during our employed years to purchase the factory from which we run our business, via a SMSF. The rental income our company pays to our SMSF, along with the compulsory 9% on our salaries, is then invested. Whilst I agree that the regulatory risks of superannuation are unknown (largely at the whim of Gummint) and this is problematic, for me the benefits outweigh the risks. Just keeping my fingers crossed that we're not all forced to treat our SMSF capital as a lifetime annuity or similar down the track - I have plans for at least a small lump sum

GG999 · 13 January 2013

skc said:
So_C,

With Australiansuper, do you know if you pay the usual management fee for the portion of funds under memberdirect?

E.g. Your superbalance is $100k and the usual ASF fee is 1.2% ($1200 per year). You decide to use $80k for direct investments. Does it mean you only pay 1.2% on the remaining $20k?

Thanks

I'm not totally clear on what the answer was, is it possible to make it clear please?

was it Yes, or No?

Superannuation direct investing outside of SMSF

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