If you look at the rate of roll overs from corporate and Industry superannuation funds you will understand why there is so much negative mis-information about SMSFs. We started our fund 17 years ago with just $6000. Today its worth sits in the top 8% of all SMSFs http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00290021.htm&page=14&H14 For anyone starting out I would ignore the advice that unless you have a certain amount of money its not worth it. The only proviso I would stipulate if your going down this path is a commitment to a life long learning exercise.You have to commit from the start with an investment plan that you revise every year preferably each May before the end of the financial year. We did not envision initially that our fund would perform at a compounding rate that was exponential. We started simply because we wanted to control our retirement destiny. We didn't start until we were 37 and 41 years of age. When we rolled our super out of the industry fund they made it very difficult and it was only possible because we were resigning and setting up our own business. It took 3 months to get our contributions out and another 3 years to get the employers contributions out. The next hurdle was opening bank accounts in the SMSFs name and the adjourning unit trust. It was at this stage that we realised that the banks, insurance companies, retail super and industry funds had a vested interest and their "advice" was designed to frighten and instill doubt. But it didn't stop there. As a subscriber to the financial review for many years there was a constant stream of misinformation that painted SMSFs as dishonest and tax cheats. We went through 4 different sets of accountants who constantly advised us against the SMSF model we had with a seperate unit trust and I have lost count how many investment advisors & Bankers who looked at our model and had paroxysms of rage because we had no trailing fees to pay. Like anything in life if you go down this path you don't put all your eggs in one basket. If you do this though gradually you will develop the financial skills that you can replicate in business and other investment structures so that you can set up to broaden your financial foundations and protect yourselves. Kind Regards non recourse
When you started your SMSF with $6000, how much % of that were you paying in audit and other fees? Just curious because my superannuation balance is quite low, I'm still thinking whether or not I should save up a bit more to make the $700 annual fee worthwhile.
It was very expensive if you looked at what we started with. Back in 1993 the SMSF trust deed, the corporate trustee plus a Trevisan Unit trust plus another corporate trustee cost us $2,200 and then there were seperate income tax retuns to pay each year. The Trevisan trust ended up being the turbo charged rocket that sent us on our way. We were fortunate to have a family lawyer who understood the SIS act and tax law inside out. I didn't find out until 10 years later about a high court tax ruling that he based our structure on. Whenever I went to him for advice I felt like a school boy in the head masters office. He said very little other than getting me to justify what I was attempting to do. He was very dismissive of accountants warnings about the path we were going down. He would just quietly say, let me guide you on tax law and let them only do your accounts.His advice was for me to take over management of my own book keeping and be pedantic about it. Kind Regards non recourse
Question here. How do you go about making an investment plan and revising it? Do you stick mainly with cash/bonds or venture into other asset classes (property/shares etc)? 60/40 split? iWith the unpredictibility of the share market my biggest fear would be stuffing it up and making a loss. However investing wholly in cash, means inflation eats into super over the long term, doesn't it?
You nailed your problem in one attempt.....fear of the unknown. The reality is when you step over that ditch you discover a whole different world where the only problem is choosing which opportunity you wish to persue. Like a child learning to walk you will fall over and graze your knees. Every time we stuff up we call it contributing to our education fund. The problem is when we are sent to primary school we are taught that making mistakes is penalised by marking you down. In the real world making mistakes is part of growing and developing life skills. Being investor is all about snakes and ladders, sometimes you win, sometimes you lose. The idea that governments can protect you and give you a guaranteed comfortable retirement income is now being shown for what it is.... a mirage also known as fools gold. Your only protection against retiring to a diet of canned dog food is fiscal literacy. You have a brain and the internet and time. Think and grow rich. Kind Regards non recourse
I liken my investment plan to an old pair of jocks, not too tight so I have enough room to move around in them but not so baggy that I lose them when I get into water over my head. On surfing the net for 10 seconds I found this; http://moneyover55.about.com/od/howtoinvest/a/makinganinvestmentplan.htm There are lots of how to invest books. One of the best things I did was joined the NTAA (National Tax Accountants Association) about 5 years ago and I have attended a number of their seminars on trusts, asset protection and SMSF tax law. Before you run you need to crawl, then walk. Its a life long journey and it should be fun. My advice is read, read, read and don't be afraid to ask questions. Just be aware that what suits the goose may not suit the gander. We ignored all the rules about diversification with our super fund. We put 100% into commercial property and each year we thumbed our nose at lectures fron accountants & auditors about diversifying. Our only regret is that we didn't start stacking bullion earlier as we did not understand the principle of hedging at that stage. Kind Regards non recourse
If you started with $6000, How long did it take you to get to $12000?. The bigger your fund grows, the less % cost of having your books audited. Compound returns must surely mean the biggest capital gains should be made in the latter years prior to retirement . 72 is the magic number when it comes to doubling your money..Average gain 6%. it takes 12 years.. 12% takes 6years..However it means less time frames when you are adding to the capital each and every year. Congratulation Nonrecourse on having so much foresight. Do you agree with what I have said ^. Regards Errol 43
speaking of industry super funds run by the unions, CBUS is making life as difficult as possible for me in moving my funds, firstly using delaying tactics with bulldust excuses why my ATO approved whole amiount transfer form was not enough for them , and now that they have all they need apparently it takes 30 days to clear the money, what a pack of waynekerrs. Conversely my wifes fund AXA had a cheque to us in less than 5 working days with simply the ATO form and a verification of her ID. Makes me mad because mine is the larger amount and I want it out of the financial systems hands before christmas as I feel lot will go down over the holidays.
G'day Hiho, thanks for the info i'm also with CBUS and currently setting up a smsf did you have to give them any more info or were they just chasing ATO forms which the ATO don't use anymore. I have changed my super atm to all cash while I'm waiting hopefully that might make it easier.
CBUS wanted copy of ABN letter from ATO, also wanted a statement nominating the trustees which I typed up and we both signed it. They are fussy about how and who signs the copy of the ABN letter from the ATOP m ust be JP or doctor or copper and clearly state their name address and capacity. I moved my super into cash year ago in anticipation of the meltdown, but I dont think any of it is safe untill I get my mits on it
Yeah but when NR started his SMSF $6000 was worth a lot more than what it is now. For now I don't believe anything under 5 figures is worth bothering with SMSF. My current fees annually are < $700 so going to stick with it for 6-12 more months before I start my SMSF.
If you wait until you have 5 figures that may never occur because like one of my previous tenants who started 18 years ago with $34,000 in his super fund. He went the share market route with an advisor mob who got him to take out a margin loan for $300,000 back in 1994. (Don't believe the nonsense you couldn't borrow in a super fund if you were in the know you could) After all those years they advised and churned his share portfolio and guess what... end result he came away with $17,000. That was after the biggest share boom in a hundred years. Nice little earner for the advisors. If you don't want to be bothered managing your funds sure go ahead as the diddy on the TV says let them drive it:lol: they will bend you over and drive it home for sure for sure as the Irish say. The reason to start right now is as the pink Floyd Album Dark side of the Moon song....Time... its ticking away your investment life blood, you need time and you need to develop your fiscal education, you need at least 20 years. Kind Regards non recourse
Fortunately I am not an idiot and have set my super as fixed interest cash so it will continue to grow (due to low fees + regular payments into super by employer) regardless of the stock market performance . Once it hits 5 figures I'm out. However, I see where you're coming from with the whole share market thing but even with retail/industry super funds you can choose and manage (albeit not completely) where your money is and what it's doing. Idiots who don't bother even doing that deserve to lose their money.
The reason for you to get out now is you have a brain....There is a very famous investment book written by a now deceased author called..... THINK AND GROW RICH by Napolean Hill. It has been on the best sellers list of investment books for some 70+ years ? Kind Regards non recourse
