Low cost super funds

Discussion in 'Superannuation, SMSF & Personal Insurance' started by CRT, 14th Jul, 2017.

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  1. CRT

    CRT Member

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    Noob alert!
    Started reading Barefoot investor last night, and turned out we were already doing most of what Scott Pape is suggesting in the book except "Low Cost Super Fund". I am set up with colonial first state from day 1 since I moved to Australia. He recommended HostPlus in the book, but did not mention pro/cons of it.
    Scouring through forums, there are some really bad reviews for HostPlus. Whats the general opinion on low cost super funds ?
     
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  2. twisted strategies

    twisted strategies Well-Known Member

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    after observing my super fund , from a previous employer ( an employer managed superfund )

    i took the opportunity to exit my super fund

    and took full control of my retirement income protection .

    i do not know anything about HostPlus but some complaints seem to be across the industry ( like insurance contributions with look very comforting .. until you CLAIM on them )

    mind you i have since invested in several ( listed ) super fund managers and that hasn't been so bad an outcome ( much better than having it eroded by fees and charges ).

    my main issue with super funds in general is they can't predict your future needs ,
     
  3. Hodor

    Hodor Well-Known Member

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    There are some really good low cost options about and plenty of options within these to suit. Not much you can control for certain aside from fees so there would want to be a really compelling reason to pay them. Wanky finance talk, that the market pumps out by the truck full isn't a good reason.

    Your timeline for super is long and includes retirement, fees are cumulative. 1% fees reduce your balance by almost 30% over 35 years - you will likely have super for longer than this.

    Another way to look at it is if a fund returns 10% a year then a 1% fee represents 10% of your returns and the active fund will need to outperform by 10% to pay its own fee. I am not aware of any Super funds with returns near 10% over the long term.
     
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  4. twisted strategies

    twisted strategies Well-Known Member

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    one of my pet dislikes , in super funds i have seen , is the assumption you will cash out ( liquidate the holding ) when you retire .( a second type expect you to draw down regularly .. instead of living off investment returns , while your assets grow on to help resist inflation )

    one reason i chose my own path , was to set up a sustainable income stream after retirement ( and gain experience in investing along the way )

    some funds basically give you a 'lotto-win' type payout and throw you to the wolves as a virtual novice .

    not only is fee structure important but also your outcome at retirement age .

    i liquidated my super and put it into AMP ( the share ) and despite the uninspiring performance of AMP , it still beat the heck out of the super fund ( in real $$ terms not fuzzy performance metrics ) (6 years in AMP blitzed 12 years in the fund ).

    had i been more experienced i would have added that cash to the BTT ( share ) investment which did more in 6 years ( i invested in June 2011 ) than even the most optimistic projections , i have seen in retail super fund presentations .

    i have retrieved my cash invested THREE TIMES over and still have the original $ value ( plus roughly 10% ) invested in BTT .

    the story with MQG is very similar ( but MQG also gave me a bonus SYD holding ) ( that was an uncomfortably large play ... i won't be doing that again , despite having a good outcome )

    it will be hard for a current novice to equal this UNLESS you wait for a significant market downtown ( as happened in 2011 )

    SO ... what about an SMSF stash most of the cash into interest-bearing deposits ( i chose a saving account that pays interest on every dollar but also instant access to add or reduce the balance ) and wait , but not neglecting the rare opportunity in the investment market ( but don't forget the study and research while waiting ).

    yes it means getting your hands , dirty and your mind messed up but seeing your daily life through an investor's eyes , could be the edge you need to secure your future .
     
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  5. retirealready

    retirealready Member

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    Maybe it's just me but assuming we are talking about industry super funds, the fee spread among the the big funds is about 0.2% to 0.3% and most of the big funds charge less than 1% in total fees.

    It's been stated many times, the only sure thing are the fees and fund performance is anyone's guess. I agree with this statement but I'll ask the question why are the fees low(er). Again just talking about industry funds here. Some funds use it to attract more members. Some funds have lower fees but higher insurance premiums. Some funds have lower fees but below-average performance.The opposite is also true, especially retail funds, with high fees as well as sub-par performance (generally speaking)

    With a bit of research, I think finding a fund with decent performance compared to it's peers with low(er) fees is not that hard rather than chasing the lowest fee fund. Hostplus and AustralianSuper comes to mind.
     
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  6. twisted strategies

    twisted strategies Well-Known Member

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    my previous super fund was an employer-sponsored ( a puppet fund actually ) scheme.

    but after investing on my own behalf in the market , i have seen the machinations wielded by the industry funds as well .

    i have invested in several fund managers ( IFL , EQT , BTT , JHG , MQG and AMP ) but would rather control my own personal destiny ... which proved accidentally insightful as i was forcibly retired 3 years earlier than expected .( a normal system would have left an interesting gap to fill ).

    obviously for others , busy earning that income and raising a family ( etc. ) that research time is limited , so a formal super fund ( employer , industry or corporate one ) might make better sense for them .

    one thing i have found quite 'fuzzy ' is the performance metric ( much as it is in LICs ) , i would suggest some use it as an advertising gimmick rather than a real guide .

    maybe a beginner should start there and define their own requirements in 'performance hurdles ' ( say a reliable 5% annual growth including the compounding factor .. not something related to a statistical index )

    if confronted with a choice of fees v. performance , i will take performance ( as long as i can decide the performance metric ) ( i hold both HVST and VAS to give the ETF comparison )

    HVST is accumulated as the market slides ( it is DRPed but pays monthly ) and VAS is added at BIG dips ( crashes ) and is DRPed and pays 3 monthly .

    i find the super funds trend to make 'one size ' to fit all ( well ok maybe 5 variations of the theme ) the discouraging part , but acknowledge a more individual tinkering would incur more fees .

    so which is best for you 'go it alone ( normally a SMSF ) , an industry fund , or another formal super fund ??? ( and 'for you' , is the key criteria , imo )
     
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