My new plans.

I wouldn't bother putting much money into super at this point - you are very young still and are more likely to need that money in the short term. PAYG employees typically put a minimum of 9% of gross salary into super, so that's probably a good maximum to aim for. Don't forget that you can't get to that money until you retire - so don't put money in that you think you may need.

I'm not completely sure I understand what you are planning on doing?

Are you planning on investing in STW now? Or accumulating funds in something else (Navra?) before moving that into STW?

Just remember that Navra moves with the market - if the market drops, so will the value of your invstment, and if it does so just before you plan to move to STW, you could be faced with having less money than you have put in. Depends on your timeframe really.

I'd just pick one or the other (or both) and put your money in and leave it there (you can add to it as well - but don't plan on moving it for 5+ years).

If you are thinking you'll need access to the money within the next year or two, just stick it in a high interest savings account ... 8% returns with practically zero chance of losing your capital is pretty hard to pass up in the short term!

 

I agree - a plan like this is an excellent way to get started.

Many managed funds offer this (I think Navra does), or you can do it with a some high interest savings accounts too.

 

Given that you don't have any other source of super contributions at this point - and given that super is very tax effective savings - it's pretty difficult to argue against it.

It's all about balance really. The more you put in when you are young, the better off you will be in the future (more time for compounding to work its magic), but at the same time, if you put too much in, you'll potentially suffer during some of the most capital-intensive parts of your life (eg buying a house, buying a new car, getting married, etc).

$100 per week is the equivalent of someone earning $60,000 putting away 9% of their salary. If you can manage that - you'll do well.

I think automated investment into something like Navra is an excellent idea - you can reinvest distributions in the short term to compound your returns and then down the track you can choose to take the distributions as cash to help suplement your income if necessary. Just remember that you'll pay tax on the distributions in the year you receive them - but in the short term, that's not likely to be much of a problem for you being on a lower tax bracket.

You may also want to consider doing the same into a growth fund if you can manage it - maybe something like CFS Geared Share fund over a 5-10 year period should (in theory) outperform most things (although with much higher risk and volatility).

 

Definitely - forget the CFS Geared Share fund I mentioned if you already have exposure to the 452 fund - by putting money into a fund like this regularly, you get a "dollar cost averaging" effect, which sees you buying more when prices drop. Given you are taking a long term view with these funds, then having an automated investment into them will still take advantage of drops in the market.

I'm pretty sure you can set up CFS FC to allow you to make regular investments and automatically allocate your money in a split between multiple funds - so your $100 per week might be split 50/50 between the two CFS FC funds (you get to choose how the money is split). That might be a good way of doing it.

One thing to keep in mind is that if you ever sell some of your funds - by using regular investments you are increasing the complexity of calculating capital gains come tax time when you sell. However, if you are taking a long term view, I believe that the benefits of your plan outweigh these potential costs. Some good software will help you with that anyway (I'm actually planning on writing some software to help with this process after facing exactly this situation last fiancial year - don't hold your breath though, too many other projects on in the short term ).

 

You just need to measure these investments against your goals for the timeframe (5+ years in your case) ... do you think that these investments are still suitable to be holding over the next 5+ years?

I would suggest that Australian shares are a good place to be in - and a fund which invests in largely blue chip shares (which I think the 452 fund does), is probably not a bad place to be. There may be short term volatility in the market, but over 5+ years that should be largely smoothed out I'd hope.

Property is a bit more problematic. The property market has been hit hard by credit problems, a loss in confidence, and a slowdown in economic activity worldwide (except Australia - but the listed property sector here has been hammered too!).

At the end of the day though, good quality property assets held via suitably conservative vehicles (without too much gearing) should continue to produce income - and income makes the world go round. If you believe that the assets the CFS property funds hold are accurately valued and have scope for future growth, then why not hold them and continue to add to your investment while sentiment is so low?

The flip side to this argument is to identify whether there is somewhere better for your money over the next 5+ years. There loss in value of those funds has to be earned back in exactly the same way as any other investment has to earn its returns - so there's no point holding onto these if you believe you can get better returns elsewhere on what capital remains.

That's the difficult part - do you buy resources because they are "hot" now? Or do you buy property because it is "not" now? That starts to become a philosophical debate!

Personally I'd be looking very hard at the global property fund - and doing some research into the prospects for property securities worldwide. Otherwise, I think Australian property has been oversold (or is at least relatively fair value now compared to being overvalued last year), but still question how much growth we will see until interest rates start dropping again and credit eases up.