Superannuation Discussion + market volatility

[JohnK]

Super has been accumulating at consistently 15% on average since 2008
Last financial year 20%

Fees still less than $120 pa

Of course that’s all ink on paper and imaginary unless realised now.

Which super? Conservative investments have realistically increased 5-6% if not less.

What concerns me is that my super balance has dropped 10% in the past 6 months. For someone close to retirement that's a significant drop.

It took 6-7 years to recover the losses of 2007-2008 and this one looks to be heading the same way.

I'd like to take my entire super as lump sum in 20 months time but as I'll be working another 6-7 years think the best I can do is some sort of transition to retirement.

 

[drron]

Most people are OK with a rise in Super but a drop is worse. If your account drops 20% you have to the earn 25% to get back to evens. If it drops 50% you have to earn 100% to get back to Square 1.

 

[serfty]

What concerns me is that my super balance has dropped 10% in the past 6 months. For someone close to retirement that's a significant drop.

I took the gamble based on some reputable commentators stating interest rates should have been increasing late last year and all that implies.

I switched all my super to "cash" just after Christmas, so have lost nothing since other than via inflation.

I decided not what to go through watching what happened with my balance due to COVID panic in earlyish 2020.

 

[lovetravellingoz]

I took the gamble based on some reputable commentators stating interest rates should have been increasing late last year and all that implies.

I switched all my super to "cash" just after Christmas, so have lost nothing since other than via inflation.

I decided not what to go through watching what happened with my balance due to COVID panic in earlyish 2020.

With Covid I switched to to cash early and did very well from switching back when I thought things had bottomed out.

This time I did not move quick enough, and so will just ride it out. I am still in front though. So "swings and roundabouts" for myself.

I do have a sizeable cash reserve though outside of super and so will just draw down on that will minimising how much I withdraw from my Super in Income Phase.

I have selected minimum % which is still only 2% after it being extended for one more financial year.

I have also changed my drawdown interval to annual and so my only payment in 2022/23 will be in June 23.

 

[tgh]

I just don't get some of these comments… scratches head….
Capital is not income , capital earns income.
Share income varies little through short term headline busts and booms but does soften slowly and steadily as a recession or depression takes hold.
No bust in the last 20 years has affected our real income very much if at all….
EVERY acquaintance that has panicked and gone to cash over the last 20 years has suffered for their judgement , resulting in eating their capital and an inability to build organically in the good times.
IF the worst comes to visit, we will eat bread and dripping rather than eat our Capital...

 

[Buzzard]

For the reason you mention @tgh we hold 2 or 3 years in cash plus we have rental income to sustain us from any drops.
Sure we have to draw down the minimum % from super once per year but super remains in the "balanced" option just waiting for the rebound.

 

[cove]

The other night I was at a stockbrokers function and a 68 year old guest was heading back into work as a teacher at a private school. I am thinking there will be quite a few thinking about returning to work.

 

[tgh]

Searches for bitcoin and tulips provide a discouraging picture of human frailty..

 

[cove]

I just looked up Bitcoin on Kitco.com and it is trading around $19k this morning.

 

[tgh]

How many desperate souls were sold this investment between $13689>19/06/20….$87843>12/11/21.. and now ?
It is also true that the desperate soul has not lost a cent…..yet...

 

[exceladdict]

EVERY acquaintance that has panicked and gone to cash over the last 20 years has suffered for their judgement , resulting in eating their capital and an inability to build organically in the good times.

I was so terrified by the GFC drops that I have always had a very conservative mix. In hindsight, I now realise how many years of lost building that represents. So am wondering whether becoming a bit more risky now is catching a falling knife or a good time to switch in.

Thinking is that at the least, I won't be buying at all time highs.

 

[serfty]

I just don't get some of these comments… scratches head….

There's a difference between what you might do at the ages of 45, 55, 65 or even 75 ... with the last two, one likely does not have 20-30 years to "ride it out".

I plan to go back to indexed soon enough (I like hands-off), just need to pick the right time (as is always the case).

FWIW I am currently over 12% better off over the last 6 months than if I had done nothing.

 

[SydneySwan]

The other night I was at a stockbrokers function and a 68 year old guest was heading back into work as a teacher at a private school. I am thinking there will be quite a few thinking about returning to work.

I have a friend who retired at 65 and is now 69 but has never really taken to retirement and has hankered to return to work ever since. His wife was against him working again and he has no financial imperative to work but his wife has been very spooked by the last couple of weeks of stock market falls and seems to think they will be on the government pension soon.

I ran into him at my local coffee shop today and he was full of himself. Apparently yesterday his wife told him that he may have to work again. He ''reluctantly'' agreed but expected to have a signed contract by tomorrow!

 

[cove]

With the inflation rate being rather different from your cost of living you need to be aware that some costs will be running hot. The next two years could prove troublesome for those who are just scraping by at the moment.

 

[Flashback]

There's a difference between what you might do at the ages of 45, 55, 65 or even 75 ... with the last two, one likely does not have 20-30 years to "ride it out".

I plan to go back to indexed soon enough (I like hands-off), just need to pick the right time (as is always the case).

FWIW I am currently over 12% better off over the last 6 months than if I had done nothing.

It's been a pretty volatile week, at the beginning my portfolio was -1% and then yesterday...... -10%. All paper losses for now and will just ride it out, it was +20% mid last year so swings and roundabouts. I need to decrease some of my share holdings US stocks when the time is right.

 

[JohnK]

The other night I was at a stockbrokers function and a 68 year old guest was heading back into work as a teacher at a private school. I am thinking there will be quite a few thinking about returning to work.

I started my adult life thinking I'd retire at 40 years of age and came so close if not for my stupidity to get heavily into debt.

I may be able to retire at 65 years old but that's not looking likely with a little one going through school.

And I wish people would stop calling super losses paper loses. This is real money that goes into super. It's not play money.

I've been at current job for 14 years. My current super balance is not far above my contributions in that time. That's embarrassing. It should be embarrassing for the industry. I wonder if the people running these funds has been on same salary since 2008 without increase.

 

[serfty]

I've been at current job for 14 years. My current super balance is not far above my contributions in that time. That's embarrassing. It should be embarrassing for the industry. I wonder if the people running these funds has been on same salary since 2008 without increase.

Maybe you should have reviewed your fund. In the 12 months to Dec 30 before I went full cash, my indexed fund had increased 13% in value. In the last 6 month since than it has dropped 12% in value. Overall it was still ahead 23% when I bailed after 27 months. That included a recovery from a 25% drop in March 2020.

 

[Flashback]

And I wish people would stop calling super losses paper loses. This is real money that goes into super. It's not play money.

Except it is - same with any other investment. Unless you sell, you're not realising that loss. With shares it's timing in the market, not timing the market. The long term averages support this.

 

[JohnK]

Maybe you should have reviewed your fund. In the 12 months to Dec 30 before I went full cash, my indexed fund had increased 13% in value. In the last 6 month since than it has dropped 12% in value. Overall it was still ahead 23% when I bailed after 27 months. That included a recovery from a 25% drop in March 2020.

I am reviewing now that I have some time and I was shocked to see such a drop.

Either way it's a gamble.

 

[tgh]

My current super balance is not far above my contributions in that time. That's embarrassing

It's worse than embarrassing.. its criminal.. unless you have set some silly options.
Who is the fund manager..name and shame time...