My super statement shock

Hi All,

For while i haven't experienced any shock like what my super statement gave me.

I have few questions on super. Please some one help me.Thanks in adavnce.

1) Please tell me how to calculate return on my super investment for the last half year.I am not sure how to calculate return from periodical investments like super.I am giving you all details.

Opening Balance 31 Dec 07: $33054.81
Closing Balance 39 June 2008: $32715.05

Amount Deposited(Employer contribution) on 21/01/08: $1005.30
Amount Deposited(Employer contribution) on 28/04/08: $2250.00
Amount Deposited(Employer contribution) on 27/06/08: $4300.00

Total Tax: $1133.30

Insurance Premium: $99.12

Total Fees affected my investement: $250.43

Total Loss: $6662.64

2) I felt a BIG shock when i saw the statement,I know super funds are down but this is not what i was expecting.I am with colonial fist choice personal super. Is my loss comparable with other funds for the same period?

3)In super how often it is recommended to adjust the portfolio? At the moment i am using auto balancing every quarter by the fund.At the moment i have 57.8% Aus shares, 28.5% global shares, 9.3% property & cash 4.4%

Sorry too many questions in single message.

Thanks again

KP

 

Hi KP,

1. Check the fund prices for your different funds as at 31st Dec 07 and 30th June 08, Sim has a wonderful website Compare Funds :: Managed Fund Comparison Charts and Statistics .

2. Your superannuation is a tax structure, inside this tax structure you hold different assets, the return of these assets affects the return of your super fund, ie, if your super fund is 100% invested in a term deposit, your super fund returns are going to look like term deposit returns.

3. Everybody has different ideas about auto-rebalancing, IMHO I don't like it as it goes against a trading rule, cut your losses and let your wins continue. Auto-rebalancing does the opposite, it cuts your wins and re-invests into the losers in your portfolio. Saying that, last years winners aren't going to be this years or next years (a good example is listed property funds had a few fantastic years and now have had a dog of a time).

Your welcome.

Cheers,

Dan

PS Before making an investment decision speak to an FPA registered Financial Planner.

 

Hi KP

I don't have comparative data from my fund because my super has been in cash since November 07 but from what I understand the balanced fund of Australian Super lost approx 7% in the 07/08 financial year.

Yes that's a poor return and it would have been a bigger loss if it hadn't been offset by gains earlier in 2007.

You are not alone here. All super fund have been smashed due to share market corrections and I should point out that the damage is already done and by moving your super to another fund right now might not help you much.

I wouldn't blame the fund because we are the ones who decide where our super is invested and the higher return plans such as the one you are curently in, were appreciating nicely at 17% or more for the past 3 years.

Here is the current performance of Australian Super
Investments - AustralianSuper
They are all negative except for property and cash

Cheers

 

I beg to differ ...

I DO blame the funds.

They are the ones lending HUGE amounts of OUR shares to the hedge funds for targeted and agressive short sellering in the market. This has contributed significantly to their members' lost wealth.

What amazes me even more is that the US Govt has announced restrictions to short selling practices so even the most rabid non-interventionist government has recognised this horrible disease.

YET our super funds recently collectively reviewed this practice and decided to continue as it "added value" to their members.

That is why I have a SMSF. It is mostly in cash except for a few bank shares bought around March for the dividend yield.

I do NOT trust anybody with my super !!!

Besides, it only costs me $220 (inc GST) for auditing, plus the $150 ATO levy per year.

And if anybody suggests using a "flexible" super fund where you can select what type of investments - check the fees you are paying for more "control".

Cheers,

Rob

 

Rob

They are probably thinking that when the market turns they can make money from it, but until that happens ,the super funds will be suffering larger losses...

Cheers

 

Hi Rob,

I've been thinking about setting up a SMSF but have held off thus far as I was under the impression that the fees were a lot higher than those you have quoted. Are you an account?

Cheers

SACKO

 

You need to understand the nature of your investment.. unless your invested in cash, no investment goes up in a straight line. You will have down periods, as well as up periods, and since our market has returned 20%+ PA for the last few years, a well overdue correction was to be expected.

Super is a long term investment, so fluctuations should not be of concern unless you nearing retirement.

 

Fees depend on how much your Accountant has to do and how risky your transactions are for the Auditor.

If you keep all source details well filed, with clear simple transactions then your fees will be lower.

I prepare my own fund tax returns and financial statements. Every bank & distribution statement is collated and I provide spreadsheet summaries to show all workings.

Since most of my funds are in cash at the moment, it does not take a rocket scientist to work out the financials.

Now if I was engaging in CFD's and holding rare artwork in premises leased from my super fund then the Auditor would add two or three zeros to his fees to cover his risk of being sued or suspended if he missed a small detail on very dubious transactions.

Trouble is most people want someone else to manage their SMSF as they cannot be bothered ... so much for the "self managed" part.

They would be better off in an Industry Fund with lower fees.

Anyway, this is not advice and I would not recommend anybody with a small balance set one up unless they expect the balance to increase in the short/medium term *AND* they are prepared to educate themselves about their duties as SMSF Trustees.

Cheers,

Rob

 

Hi Rob G,

Fund choice exists so that the majority of people can choose where their superannuation is invested. Hence, they have the choice.

Only superannuants in single investment options don't have the choice of where they are invested, the majority of other superannuation funds have the choice to choose from different multi-managers ranging from Cash to High Growth.

Our government / regulators mustn't think that it is as big a problem if they haven't decided to regulate it like the US.

It's excellent that you are taking a more active approach in your retirement savings. The majority of Australians don't have the time, inclination or education to do so.

Cheers,

Dan