A grudging concession on your part,
Er no - I've said that before actually.
but your focus on just short term trading in pension phase is misplaced. I know several investors who have accumulated significant sums in super through contribution and essentially buy and hold strategies.
Cool...compared to what? You see without a comparison your statement is... meaningless. I know someone who deposited $1,000 into a 30 year term deposit and ended up with over a million dollars. Was that a good idea? You can't answer that question because you have no idea of what rate of return it could be compared to. Similarly your statement that you know people who have accumulated significant sums in super through buy and hold strategies has no basis of comparison. You are not comparing apples to apples. You only have one apple.
Superannuation in its current format for the vast majority of superannuants restricts their ability to
compound gains. IE the example I gave you already in relation to Property in a Super Environment. You are comparing a straight line equity growth, 1 asset growing over 30 years, compared to an exponential compounding line, multiple growing assets over 30 years. In ANY comparison over the longer term the exponential line will
vastly outperform the straight line.
Is that clear?
To prepare for pension phase you should accumulate a significant sum, quite hard to do if the only contribution is the compulsory employer levy.
Your making a huge false assumption here. When we retire what do we want? We want an income that is independent of our personal self exertion - a passive income stream to support us when we no longer have our employment income to support us. Your assumption is that Super is the only environment in which we can/should do this. Since super restricts our ability to compound our gains, we need to compare our real rates of return within super, with our real rates of return outside of super. Even after tax the lack of the ability to compound our gains loses every time. Straight line versus exponential compound line.
The only time this is beaten within super is when we use a system that internally compounds. IE a short-term trading strategy. It's only then that the taxation benefits within super outweigh the taxation detriment outside super.
Clear?
I actually enjoy trading, am not "chained" to the desk all day and not interested in being put out to pasture on a golf course like a retired race horse.
Great! I'm happy for you. I enjoy it too. I suggest however that we are not the norm.
My 80yr old father fits your description of retiree, every few months he hunts around in the U.S. market for his next CD purchase, gets 2% return on his money (banks must be safe after all) and can only afford to go out a couple times a month - no trips to the golf course for him. He also bought a home in the U.S. 6 years ago which is now worth $250k less than he paid for it yet he still has a $300k mortgage (real estate always goes up does it not). His net worth, thanks to real estate is 0. Share that all to common picture with your clients.
Ok three things.
1) I'm very sorry to hear about your Fathers financial situation. Needless to say your father doesn't fit my description of a self-funded retiree. I hope you can see why.
2) Australia is not China, UK, or Mongolia either. Your comparisons between us and the U.S. are of
limited use. It's like me saying don't invest in the Australian share market over the last 30 years because of what's happened in Japan's share market.
3) I can stack your father's example with plenty of opposing examples. What now? You're taking a single data point and drawing a conclusion from it and emotionally investing significance.
Advise your clients as you will, but gearing is a double edge sword - it magnifies gains and loses.
Which means we use risk management techniques to control our losses....which is the part that a lot of people don't do.
30 years of gearing into property has paid off in the past, the future is another story.
Yeah yeah the sky is falling I get it we're all going to end up eating each other when the world ends. You're not doing your side of the debate any good by fearmongering.
What you should tell your clients is, get an education in investment principles and give them a roadmap on how to proceed with this education, not just "don't do this."
Yeah well we are also an RTO and request our clients do courses before we engage as their advisers, so we already do that.
Hardly, since it's not my speculation but the forecast of many reputable sources. Believe what you will, but if you believe that Aus property prices are not in bubble territory then your not paying attention to trends and market cycles. Keep buying those properties though since Aus property surely can only go in one direction, up and up. LOL
Cool. Source me up. Give me data, stats and fact that you're basing your argument on rather than opinion. I'm not contending that property
In Australia only goes up. As you've pointed out property is cyclical and has trends. So what may be bubble territory in Sydney for example may not mean a rats **** in Darwin, which is subject to a completely different set of drivers. Which is kinda similar to my example of not buying shares in Australia because Japan's share market has been declining for 30 years.
Cheers
Sir O