Where does your super money vote?

Where does your super money vote?

It appears that there will be a change of government as voters are unhappy with the last 6 years of the current version of a government.

However many who vote for non Labor parties will have their super funds in various industry funds. These industry funds have marketed themselves as no commission & low cost & have attracted many via industrial award bullying.

Since when was low cost the benchmark for wise purchases?

They are advertising at every bus stop & at every TV advert  break

Are they doing it for nothing?

Where do their profits go?

Who is on their boards?

How much do they contribute to the Labor party?

And lastly how do their funds perform?

Let’s look at a big one marketed as AustralianSuper.

We observe their investment fees are not that low & certainly not zero. 

In fact from 0.08% for cash to 1.06% for international share option & their balanced option which in many cases is the default option is 0.66%.

We suggest that the fees are lower because they haven’t had to do the marketing costs that every other business has to spend to attract business. That’s what Industry awards can do for them. Bully from them.

Let’s look at their returns. 

Performance for Balanced
Daily Rate (01.09.13) FYTD (01.07.13 - 01.09.13) 1 Year (%pa) 3 Year (%pa) 5 Year (%pa) 10 Year (%pa) Inception 01.08.85 (%pa) to 30.06.13 pa AusSuper 0.00% 3.64% 15.63% 8.79% 4.20% 7.64% 9.54% Benchmark n/a n/a 14.73% 7.99% 3.89% 6.94% n/a

Performance for High Growth

	Daily Rate (01.09.13)	FYTD (01.07.13 - 01.09.13)	1 Year (%pa)	3 Year (%pa)	5 Year (%pa)	10 Year (%pa)	Inception 01.07.96 (%pa)
			to 30.06.13 pa
AusSuper	0.00%	4.38%	17.27%	9.03%	3.28%	7.42%	7.43%
Benchmark	n/a	n/a	17.11%	8.65%	3.50%	6.78%

We also recall recently that due to claim experience this super fund has increased insurance premiums within by substantial amounts 30% + approximately . The world’s oldest profession who solicits ‘no win no fee’ can be thanked for that.

Insurance is another article in itself & no advice could be very costly to you & your family. Just note that they are group plans with exclusions. 

We tailored Ron’s insurance with 1.4 m life cover as 2 very young children & no house.

When we reviewed last week end Ron’s portfolio that we had tailored for him after his request for help 2 years ago we see on our desk today.

Total Portfolio Return 15 Apr 2011 ,20.36% 20.30% 20.36% N/A, N/A

Individual Investment Returns

Cash Account Portfolios

CASH, Cash Account 15 Apr 2011 10.08% ,1.26% 1.26% 1.26% N/A, N/A

Australian Shares - Concentrated

PER0102AU Perpetual Wholesale Concentrated Equity Fund 20 May 2011, 13.08% , 28.32% 28.23% 28.32% N/A, N/A

Australian Shares - Specialist

PPL0106AU Antares High Growth Shares Fund 20 May 2011, 11.31% , 24.49% 24.42% 24.49% N/A ,N/A

Australian Shares Portfolios

IOF0206AU Perennial Value Shares Wholesale Trust 20 May 2011, 13.41% 23.92% 23.84% 23.92% N/A, N/A

Cash Portfolios

SBC0811AU UBS Cash Fund 20 May 2011, 5.22% , 1.84% 1.83% 1.84% N/A, N/A

International Fixed Interest Portfolios

ETL0018AU PIMCO EQT Wholesale Global Bond Fund 20 May 2011 , 10.03% , 2.24% 2.23% 2.24% N/A, N/A

International Shares - Regional and Emerging Markets

BTA0130AU BT Wholesale Japanese Share Fund 25 May 2011,14.83% ,.17% 40.04% 40.17% N/A ,N/A

PLA0004AU Platinum Asia Fund 20 May 2011 7.35% , 28.01% 27.92% 28.01% N/A ,N/A

Account Number: Ron

Ron wasn’t unhappy with those results & yes we are not comparing apples with apples as this is a tailored plan for Ron. Ron approached us in April 2011 & the market has been good & the Australian dollar has fallen. 

Ron is also not a trustee of his fund as who would want to be. Even Phil Kerns has written loudly on why you shouldn’t be a trustee.  We aren’t either & we have been an adviser for 29 years. Greg our mechanic, agreed with us & not his accountant who had suggested the SMSF story.

If you want your money to vote as you do then you are welcome to call us on 07 3848 1088 or email or visit our websites

 

Our principle is ‘what would we do if we were in your position so that you will be better off in three years time’.

  Let’s not forget that any shade  & colour of government wants $170 Billion each year of your money. You need it more & waste less of it.

Lets also remember the largest fee is the government 15% on earnings. However if you are over 55 then we can reduce that to Zero. We might even help your debt reduction need.

John McAuliffe

Financial advice: to seek, or not to seek? 

we just read this post by another planner also named McAuliffe

we agree with all that Ash has said & hence we include the link to what he wrote

as a summary for you
 
Finally, it was a batch of bills they didn't know how they'd pay that pushed the couple to see a financial planner.

The decision changed their lives.

"I'd always wanted to get financial advice but it's one of those things we'd put on hold, we didn't have the money to go and pay somebody to give us the advice," Mr Doherty said.

"As soon as we walked out of our first appointment, we both had big smiles on our faces and a weight off our shoulders," Ms Doherty said.

"It makes your life so much happier."

and also

 "It's not about having huge amounts of money and getting advice on how to invest it, financial advice is about achieving your lifestyle goals, whether that's retiring at 55 instead of 65 or buying your first house or your tenth house."

the link again  with the full article

 

You are  welcome to call us on 07 3848 1088 or contact us via our websites. 

We advise you what we would do if we were in your position so that you are in a better position in 3 years time.

John McAuliffe 

Jettison mortgage

We had ‘David & Margaret’ call us after they had been to their bank. Thanx Geoff for the referral to us.

David & Margaret weren’t happy  with the bank’s Statement of Advice’ that ‘all of the products were the bank’s & there was too much insurance.’    

    

At our initial lunch here we listened to this & as we summarised later to them

Lets also remember that the bank considers your ‘liability’ as their asset. Why would they suggest reducing it?

When Margaret corrected David in that the mortgage wasn’t 500,000 ‘it is 498,000 as I looked at it today’ then it suggests to us that the mortgage is a stress to her.

If the bank had read what we read on the completion of David & Margaret’s ‘HW’ then here is what they might have read.

Goals and Objectives

Short Term Goals

1.       You wish to halve your mortgage over the next three years.

2.       ….

Medium Term Goals

1.         Jettison mortgage

2.         ……..

Long Term Goals

1.       Put ‘mortgage money’ into interest bearing investments/equities

2.       ….

 At our age it is great having no debt & when you are in the ‘fatigued fifties’ as they are then debt reduction becomes a priority.

At the lunch we made this suggestion but the bank had run the numbers & they were arguably better off building their supers up. If you have a ‘growth’ profile then earning a higher gross return would show this. However what if another GFC or another 'third in a century' flood .

 Guess where their super were to go.

 Lets allow for some comfort & listen to Margaret.

Margaret & David will be impressed what we project for them as their debt is zero in 2016. 

We also did allow for their Europe trip next July  to see their children doing their OE.

Yes they do have some factors going for them to accelerate the debt reduction

·         They are both over 55

·         They have [almost] sizeable superannuation that could be maximised. Remember that as your super doesn’t pay you an income it is not an asset.

·         The youngest child has just left home & the food bill has reduced significantly.

·         David is on a high salary although there is a whack of wasted taxx to come out to feed the Zombies.

We also allowed for possible mooted Centrelink changes in a year’s time.

We did if only for big brother compliance & to save us from the ‘crows’ recommend some insurance to complete some gaps in case of a stroke or trauma. We will tailor & reduce as the debt goes down & this allows for accelerated debt reduction than our model.

Insurance only gets dearer. Who wants to collect it. We did comment to Stephen who is 60 today that claims are on average 2 years after you drop your insurance. Hence tailoring & reducing but not zero  makes sense.

 Would the bank do that?

Our 1^st cousin said of the health system recently ‘they don’t know’.  Hence a preventive health story is an essential part of our holistic planning. We noted their advt whilst watching the WTA tennis.

As we state to all ‘ our mission is we would do for them what we would do ourselves if we were in their position.’

This week ‘Warren’ went to the net asking for some income protection. As he has 3 children, a mortgage & only earns 90K then he can’t afford what he should have. 

We await his call on 07 3848 1088 or email for lunch here. Warren will need a different strategy.

John McAuliffe

What’s the best use of your Super?

What’s the best use of your Super?

Yes that is a question that depends on your age & often on the size of your debts?

Certainly at our age most but certainly not all have insufficient super. Remember if you can earn 5% & you want a comfortable lifestyle then $1,000,000 will provide an income of 5%.

Who has that?

If that capital amount is within super then currently it will be taxx free. But for how long as it is suggested that Centrelink or the government will factor the income under deeming rules from January 2015.

I.e. the income & asset tests for your portfolio will count as they would if they are outside super if you qualify for government pension.

1.  This is one reason why we suggested to ‘David’ on Saturday to maximise his super. David has a Qsuper balance that over the years has performed @ 4.6%p.a.  compound. He is being charged a higher interest rate on his mortgage. At 55 he doesn’t have enough time or spare income to pay down his Debt before he may have to retire.

Remember the biggest fee on your super is in fact the government 15% taxx on the earnings of your super fund.

 Doesn’t it make sense to you that if you could minimise that Government fee to zero that you would.

David as we all do who live in Australia also has the challenge of replacing his car. Yes a depreciating ‘asset’ that will be ½ as much in 3 years time. 

How does he fund that?

David does Not have any spare cash to purchase a car.

Does he refinance the house or does he use an expensive personal loan?

Yes maybe another reason to tap your super if you qualify.

Of course as we all know there are plenty of restrictions on doing so.

2.  We had Henry & Ann here recently who due to past unemployment & a daughter with family have scary debts.  At the age of 62 then they may have to work for ever. 

How many are like them?

The finances may get to them as the debt mountain is scary & very similar to others in our neighbourhood. No light at the end of the tunnel.

Hence our suggestion for Taxx Free income will certainly help. It has to be better that the compound p.a.  that their super has achieved.

3.  James who has followed up on a roof inspection for us said today  ‘ his company doesn’t do band aid solutions’.

As we do & as we should  we asked James ‘how many children does he have? He has three aged 4, 6, & 11.

How much life Insurance do you have?

Don’t Know.

We suggest 1.5 million if you have a mortgage.

How does James fund that need?

If James’s financial situation is like most then he won’t be able to afford a $. 

Yes there are 2 simple solutions.

James suggested that  ‘he has a personal super & he might consider a SMSF’.

We commented that ‘we don’t as we don’t want to be a trustee at our age or 70+. Our platforms have all the 300 shares & fund options we need. Also the accountant only wants another set of fees’.

We liked James’s answer &  ‘we don’t do Band aid solutions either’.

4.  Brian who is a construction foreman has just asked us for a quote on insurance. Just like James we need to do more than a band aid.  Builders need architects & quotes need some parameters so they make sense. Brian can go direct & pay 40% more if he wishes. Good luck at claim time.

5.  Thanx Geoff for your referral just now to help your clients who needed more than a bank option. We suspect we have another option for them.  Their ages suggest so & we have helped Paul recently who had the same bank experience.

We intended since the 1^st cricket test to ask & comment on ‘Should Stuart have walked’  as it was one of the talking points of the 1^st test.

Stuart didn’t as either he has ‘broad’ shoulders or he is a team man or he is constricted & restricted to the rules & regulations & law.

The  law for us now for us has a ‘best interest’  section. 

We didn’t & don’t need that law as it has always been our philosophy to do for you what we would do for ourselves if we were in your position.

Law in our opinion is the escape clause that allows personal integrity a fall back. This didn’t work @ Nuremberg. 

We would have walked as we all have to live with our decisions. Our name is important to us.

We understand The Don didn’t  & understand he did Not have too many friends  in Adelaide. Maybe his average would only have been average.

You are welcome to call us on 07 3848 1088 or email us or visit our websites. 

Today is the time to remove the band aid & financially progress.  Let compound interest & good advice help you & not restrict you.

John McAuliffe