Why is my super tanking? I thought Oz was doing ok?

[GG999]

Hello all,
I was wondering if anyone could provide any insight:

I had 82K in super, put in approx 8K over the year, got taxed 1.5K and LOST 7.5K investing 100% in Australian shares with AustralianSuper. Less fees etc so I now have approx 80K.

LOST 7.5K!! I thought that our market was stable? I thought our economy was doing ok - treading water, but ok? I don't get it. This is the same return as when the GFC occurred two years ago.

Can anyone explain it to me, please?

cheers,
Res

Presumably the tax would have been greater if you hadn't put it into super?


I checked the performance of 'Australian Shares' in Agest over the year 4 Sept 2009- 4 Sept 2010 (date of your post) and it is + 6.4%
That must mostly reflect dividends and franking advantages because the Aus market hasn't changed much over that period.

I then compared Agest to AustralianSuper and there doesn't seem to be a big difference in terms of fees etc

AustralianSuper seems to have a platinum 7 year award which is odd because it says in there that it started in 2006. (Obviously there's something i don't understand)

So your big loss is inexplicable - have you tried phoning and asking them whether there's been a big mistake?

 

[resbequoi]

Presumably the tax would have been greater if you hadn't put it into super?


I checked the performance of 'Australian Shares' in Agest over the year 4 Sept 2009- 4 Sept 2010 (date of your post) and it is + 6.4%
That must mostly reflect dividends and franking advantages because the Aus market hasn't changed much over that period.

I then compared Agest to AustralianSuper and there doesn't seem to be a big difference in terms of fees etc

AustralianSuper seems to have a platinum 7 year award which is odd because it says in there that it started in 2006. (Obviously there's something i don't understand)

So your big loss is inexplicable - have you tried phoning and asking them whether there's been a big mistake?

Yes, I definitely saved some tax by putting money into super.

I feel a bit sheepish now because since my panic attack, my super basically recovered what it lost (not that great of a result actually but that's the risk of shares) - which was the point of startraders post of extremes. Sheepish but relieved and happy

I had a closer look at doing my own super, even the e-super option people have talked about and I realised I just don't have the time to set it up and manage it right now.
Also, Australiansuper does have an ASX200 option so I can trade whatever shares I want. Also the DIY asset allocations I've decided to so some investment switching and mixing (keeping in mind the fees).

Silly me having to wait for a big shock before I pulled my finger out though.

Thanks all very much for your posts answering the thread.

cheers,
Res

 

[doctorj]

With $80K you should be setting up your own SMSF.
Then YOU have control.

Just curious on this. Not sure what's so wrong with getting specialists to take care of things that someone might not necessarily have expertise in. Saying you should do your own SMSF if you have $80k you should run your own SMSF is a little like saying if you have anything larger than a moderately sized house you should be doing your own gas plumbing and electrical work. Sure, some can, but often its worth acknowledging that its best to engaging others to do risky things.

 

[sinner]

Why does the super "cash" rate yield less than online savings account?

"Cash" option in the Super is not same as cash in a bank account.

The first option is usually invested in 30-90 day bills/notes/swaps on the money markets, extremely liquid, with the rate closely tracking the RBA cash rate +/- a few bps volatility and a few more I'm sure the fund manager takes.

Cash in an online bank account is generally returning yield based on longer term home loans, credit card and term deposits plenty of which are still locked in at pre-GFC rates. This is where the premium is.

These days, there is no such thing as "cash", not even under your mattress. It's all just debt. So pick your debt wisely, chasing yield or conversely hoarding cash doesn't always pay. Anyone with a brain can see the Treasury guarantee is worthless in a crunch. Keep your savings/super liquid, diversified, safe and accessible. Not interested in returns, just a retention in purchasing power. You want the dollar you save to be worth a dollar when spent.

I believe Nassim Taleb recommends 90 day bills in the domestic currency as the liquid savings vehicle. You will never be on the wrong side of a move in rates for more than a quarter and you pretty much get at whatever the central bank is loaning out.

 

[gooner]

Just curious on this. Not sure what's so wrong with getting specialists to take care of things that someone might not necessarily have expertise in. Saying you should do your own SMSF if you have $80k you should run your own SMSF is a little like saying if you have anything larger than a moderately sized house you should be doing your own gas plumbing and electrical work. Sure, some can, but often its worth acknowledging that its best to engaging others to do risky things.

Given most actively managed funds return below the index, there is a strong argument that a good investment strategy is to buy an indexed fund or just put your money in the top 25 shares, which gives you a result very close to an index fund given the weighting of the 25 companies. If you do this via a SMSF and do not churn you are likely to get a better after tax return particularly given the lower fees in a SMSF

 

[doctorj]

Given most actively managed funds return below the index

I know this is popular belief here, but has anyone done the numbers on actively managed vs passive index over a full cycle? The fact that actively managed funds will always retain some cash is sufficient to explain the difference, but also, it should mean they outperform in a downturn.

 

[poverty]

I know this is popular belief here, but has anyone done the numbers on actively managed vs passive index over a full cycle? The fact that actively managed funds will always retain some cash is sufficient to explain the difference, but also, it should mean they outperform in a downturn.

Bear in mind the active fund will be paying some tosser of an active manager plus all hangers-on a ridiculous salary when the fund is going bad or a ridiculous salary plus ridiculous bonuses when the fund is going good.

 

[nukz]

Superfund's are so bad, they are run by a bunch of bean-counters who know nothing. Most superfund's I've seen would have had better returns if they just put cash into a bank account.

Superfund's AFAIK cannot use shorting mechanism's either which created abit of lost opportunity, especially in this climate.