Superannuation Discussion + market volatility

[lovetravellingoz]

I think I hit the jackpot marrying a CA that specialises in SMSF and tax (structures)

Best not get divorced then, otherwise you might find those talents are used for Evil rather than Good

 

[amaroo]

Best not get divorced then, otherwise you might find those talents are used for Evil rather than Good

Hahaha - Risk v Reward .... it's always the same.

 

[cove]

If you know someone who is working and in their sixties with no debt and high taxable income they should appreciate that getting a total of $25,000 into super could work for them in 2018 as the top up will reduce the persons taxable income.
The way our governments are spending our money should encourage everyone in this category to think about it.

 

[burmans]

I'm amazed by the number of people still not doing this, its a no brainer IMO.

 

[Deleted member 29185]

its a no brainer IMO.

Oi! I resemble that remark!

To be fair though, it's not a "no brainer" as everyone's circumstances are different.

For me, I pay (the majority of) tax O/S so the income tax advantage of super does not form part of my evaluation as it won't change the foreign tax I pay and my foreign tax offset is greater than my Australian tax obligation including the Medicare and other levies. That leaves me with the tax payable on generated income from the fund and although it's 15% in the fund and 0% (usually) at pension phase (thanks to all the valuable advice here, I now understand the terminology, at least), however by increasing investment in the family home, the tax payable is zero for the lot. I do have a super fund O/S that is receiving tax advantages there, but it's how I deal with investment income here in Oz that concerns me. I believe I have the choice of:

1. investing in normal investments where the income derived will be taxable at my full marginal tax rate (not overly attractive);
2. investing in super which is more restrictive but where the income derived is taxed at 15% up until I turn 60 (5 years for me); or
3. investing in the family home (most restrictive) but where the income derived by capital gains is entirely tax free!

I have, from the advice received here, spoken with an expert in super (especially foreign super) and whilst I agree their knowledge is indeed head and shoulders above mine, when I boil it all down, I come back to the 3 options above and although I'm still undecided, I'm certainly leaning toward option 3 (which I'm doing to a degree, regardless).

 

[Pushka]

If you know someone who is working and in their sixties with no debt and high taxable income they should appreciate that getting a total of $25,000 into super could work for them in 2018 as the top up will reduce the persons taxable income.
The way our governments are spending our money should encourage everyone in this category to think about it.

I'm amazed by the number of people still not doing this, its a no brainer IMO.

I’m just really annoyed it’s capped just in a year when we can totally afford to do so.

 

[JohnK]

She may be able to personally contribute (or you on her behalf) - you need to consider information about non-residents contributing to super, like this article:

Thanks QF WP. Superannuation is a minefield and you've shared some useful information. Greatly appreciated.

At the moment the slice of cake is too small to do anything meaningful. Mortgage repayments, credit card debt, airfares and accommodation commuting, superannuation top-ups, buying land, building fence, save to build house, save for daughters schooling, holidays and obsessions.

There's not much left. The last one and possibly second last one can probably go but I need to keep doing silly things to stay sane.

 

[docjames]

This thread is most enlightening and fascinating. Thanks for everyone who is contributing, including those who obviously have "in-field" experise.

Reading through it, what occurs to me is the (seeming) complexity of the system and the poor understanding the layperson has of superannuation and the legal, product and fee complexities. Which again subjectively seems to be a fail for system complexity and/or general populous education of the systems and products.

Mind you, the same could be said for the medical system......

 

[QF WP]

Well articulated docjames. There are a number of different broad "types" of investors:

1. Engaged. Generally those that skill themselves and are effective decision makers. They will either have the time, inclination and ability to DIY, or they will employ someone skilled in the area. They understand the concept of paying fees for service, they embrace various strategies and implement adviser recommendations They will actively assess the value they receive for the price paid. The ideal client.
2. Apathetic. Generally the antithesis of the engaged investor. A number of different types within this type. Main sub-type allow others to make decisions for them (employers or now the MySuper model) as they consider super "too complex". They either seek no advice or seek advice too late in life to effectively allow sufficient changes to be made to their situation.

Same could be said for many professions.

 

[docjames]

". They either seek no advice or seek advice too late in life to effectively allow sufficient changes to be made to their situation.

Same could be said for many professions.

And one of the issues driving this behavior is the historic issues in how to determine which advisor will give impartial (as opposed to self-beneficial) advice (sadly).

I certainly fell subject to the latter type of advice early in my professional career. From a large, well regarded firm. And have never really been able to satisfy myself in my ability to determine from whom now to seek advice (15 years later with more complex financial affairs and earning capacity).

Again, same in many professions, although some (professions and professionals) have a better reputation for "impartial advice" or "declarations of conflict of interest advice" than others.

 

[Pushka]

Agree agree agree docjames. Similar experiences. Now if I make a mistake it will be my mistake and not that of a crooked advisor. I know the great ones are out there but have been too burnt.

 

[Deleted member 29185]

The financial sector has been seemingly top heavy with "fleece and flee" cons and I totally agree with docjames about the "once burnt, twice shy" feelings. I too was burnt by superannuation cons and I am very wary of everyone in the business, even though I realise that is unfounded for many professionals.

 

[QF WP]

The good news is that with the advent of higher educational standards for being a Financial Planner, the days of being able to open an office after doing a 3 day course will be long gone. Most good financial planners have been in the industry for a long time and have degree or Masters level qualifications. The rule of "in the clients best interest" should have always been sacrosanct and never be something to which an adviser in our industry is now aspiring to achieve. I enjoy seeing the occasional adviser being banned by ASIC, but feel sorry for those clients caught in the trap.

 

[amaroo]

IIRC the cheese and kisses holds an AFS license ... no interest in providing financial advice, just covers all bases.

 

[QF WP]

The good news is that with the advent of higher educational standards for being a Financial Planner, the days of being able to open an office after doing a 3 day course will be long gone. Most good financial planners have been in the industry for a long time and have degree or Masters level qualifications. The rule of "in the clients best interest" should have always been sacrosanct and never be something to which an adviser in our industry is now aspiring to achieve. I enjoy seeing the occasional adviser being banned by ASIC, but feel sorry for those clients caught in the trap.

Just goes to show, I saw an article yesterday about a former adviser I knew, who just got a 5 year ban from ASIC but I don't know the fact behind the banning order, so impossible to comment. I also knew three advisers all of long standing in the industry (1 of them now deceased), who flagrantly did the wrong thing by clients. I don't feel sorry for the advisers in any of these circumstances, but rather their family (who often knew nothing about their business dealings) and any clients affected.

 

[QF WP]

An interesting read from research conducted in November 2017 (some of the top misleading super myths): Separating fact from fiction when it comes to superannuation

 

[Flying mermaid]

If Shorten gets in and the change to refunding franking credits, it will mean a major review of investments and earnings in my superfund. .

 

[tgh]

If Shorten gets in and the change to refunding franking credits, it will mean a major review of investments and earnings in my superfund. .

You need to do it sooner than that , the coalition will now attack franking credits also.

A significant portion of the money invested in the au share market is by super funds, many are self managed mum and dad funds.
Shortens attempt to rape the self sufficient savers will result in a chaotic rebalancing of investment funds.
Valuations will swing wildly ,todays stars will be tomorrow's dogs and many will be badly burned.

Atm , I have no good idea of how to protect my wealth from the thieves, but I plan to try.

 

[Flying mermaid]

You need to do it sooner than that , the coalition will now attack franking credits also.

A significant portion of the money invested in the au share market is by super funds, many are self managed mum and dad funds.
Shortens attempt to rape the self sufficient savers will result in a chaotic rebalancing of investment funds.
Valuations will swing wildly ,todays stars will be tomorrow's dogs and many will be badly burned.

Atm , I have no good idea of how to protect my wealth from the thieves, but I plan to try.

not sure the coalition will, as it gives them a point of difference.....

Like many other retirees, a good portion of my investments in my smsf are in companies returning FF dividends. This will certainly change the thesis. All of a sudden the return from my property (also held in the SMSF), is up there with the best of my dividends and a lot safer as well!

 

[cove]

My SMSF just received a lovely tax refund. Bill Shorten wants to stop this.