Superannuation funds are a joke!

If superannuation is such an important investment then why is it one of the investments we pay the least attention to? Most of us give little thought to how much our fund is earning but when the market collapses like it did in 2008, we are forced to take notice.

A couple of months ago, I contacted my fund manager to find out my super balance. I decided it was better to manage the fund myself and was contacting different banks to to negotiate a good interest rate.

Now, in September I contacted my super fund again and found out they had lost $9,000 of my super since I spoke to them in June! To make things worse, they told me that my super had done very well over the year earning me 11.09%. What a joke! Not only had they lost my money and taken thier hefty fees out on top but also told me I should leave my money where it was so I could recoup the losses?

Now I know I am a slow learner but I did this in 2008 when they $60,000 of my money.  I have well and truly learned my lesson now.

The moral of this story is –  take your hard earned money which is being poorly babysat by your super fund and start managing it yourself before you find yourself in a situation where you are depended on the Government to help live the rest of your life.

Comments

  1. Angela said:

    Hi Alycee,

    Can you elaborate on what you think is involved in managing your own super fund…? It is my understanding that it is only really a viable option if you…
    1) Are ‘Stock Market’ Savvy
    2) Cashed Up with PLENTY in ur super to play with
    3) Have the time, skills and expertise to keep abreast of the the ‘rise and falls’ and respond accordingly.

    How long have you been managing ur own fund for?

    Thanks

    • Hi Angela,
      You are correct on the options.
      Plus, if you are over 55 your options are broader. You can self managed your Super Fund. For that you will need to have an ABN number for the Super Fund, have an Accountant to audit yearly, etc. Give a call to your Accountant and he will give you more info on it.
      Unfortunately I have just started to self manage my Fund only now. I could have been doing that for 10 years Amd I would have been better off.

  2. Thanks Max for your comment about the Super. You have also lost money on the Super since June 2010.
    What a disgrace!
    And you also told me that tonight on Channel 10 at 6:30 we should watch the Documentary about Super Fund. I will not miss out.

  3. Yul said:

    Hi Alycee,

    I am a financial adviser & have been setting up Self Manged Super funds for over 10 years now & due to changes in legislation a few years ago, you are now able to borrow money to invest in property inside an SMSF. There are many tax advantages of using this strategy & in fact the possibility of paying $0 capital gains tax when retiring on the sale of the property within the SMSF. If people feel uneasy with their super funds invested in managed funds or direct shares then they should be looking at the option of direct property as an alternative.
    If any of your audience would like to discuss this option with me (no obligation) including yourself Alycee then i am more than happy to provide information.
    Regards

    Yul Russell
    (Twenty20 Advisors- http://www.twenty20advisors.com.au)

    • Hi, Yul
      I really appreciate your comments and I take on board everything you said.
      What are your recommendations to my thousands of readers in this regard?
      I am sure we would all appreciate good advice from a Finance Advisor.
      Please, give us some suggestions.

  4. Blocster said:

    Whilst the average investment portfolio, which is what a super fund will use (your decision you could have it in cash if you like) had a hard time in 2008 it has since risen well. On the other hand property has dropped significantly since 2008 ;

    http://www.watoday.com.au/business/property/perth-property-values-lead-national-fall-but-rental-yields-soften-the-blow-20110930-1l0iv.html

    But you knew that. So the moral of the story is have a long term investment plan and stick to it rather than switching every time you see a negative period. If you dropped out of your investment portfolio in 2008 and invested this in property at that time you would have just got stung twice.

    • John
      This is a great comment.
      I always believe more in bricks and mortar than “paper”, but for a long time,
      I usually buy property and forget about it. Holding for long time you will never lose.

  5. Des Luplau said:

    You are all missing the point.

    “Superannuation” as you refer, is actually the most tax effective structure to invest in. Superannuation is not an asset class!

    Don’t confuse the returns of cash, property and shares as a blight on superannuation. Sure there are some intricacies like accessing your money pre-retirement, legislative risk etc, but you will be hard pressed to find a better way to save for your retirement.

    Be careful about stepping over the line and giving your readers either investment or tax advice (unless you are suitably qualified).

    With the recent confirmation of Borrowing in Super legislation, what your reader (and you) should be focussing on, is how to marry the benefits of superannuation + taking control over your investment decisions.

    Now looking at the issue this way immediately offers scope to all.

    You only want cash and fixed interest, can do.
    You are looking for Real estate or shares – no problem.
    You want to borrow money in your super fund to invest – can be arranged.
    You want to protect yourself with insurance – can also be provided in a super fund.
    You want to make sure you don’t pay capital gains tax on your property investment, nor do you want to pay income tax on the earnings – now you are seeing the benefits of utilising superannuation.

    Please don’t fall into the trap that most do. Super is not an asset class.

    As an SMSF specialist who loves combining direct investments (Cash, Fixed interest, Real Estate and shares), and doesn’t charge commissions to do so, I would be happy to open up this opportunity for you and your readers.

    Des Luplau – Horizon Investment Solutions AFSL 405897 m.0434 741 344

  6. Yul said:

    Well said Des, what people need to focus on is the fact that superannuation is not an investment but a tax structure or vehicle to access many types of asset classes including all that you have mentioned. It is very important to get good advise before making financial decisions on whether a SMSF suits & fully understand the costs & the responsibilities that a member takes on as a trustee. In many cases i can say that your every day accountant is NOT the person you should be speaking to in this regard as most are not well enough equipped or understand what is actually needed. (And i say that with the utmost respect for accountants)
    There are many tax advantages that will put your portfolio returns in a far more favourable position come retirement & this long term strategy needs to be reviewed on a regular basis & reminded of its original intent rather that short term focusing on investment returns.

    Yul Russell (AFSL 238030) Mob: 0400104915.