Superannuation Discussion + market volatility

[tgh]

I know a couple of clients like this as well (although they are well ahead of what they started). But as they age and the minimum income requirements increase, it is a little harder to have growth be greater than income drawdowns. Nice problem to have...

Hm..otoh , I opine that the a liking for growth teat sullies a lot of decision making and may lead to lower "real" returns.
I have lost count of the times I have been ear bashed about what fund X ( or client manger y) "did" last year.
One year is meaningless.
What a fund "does" over ten years with aggregated capital growth AND income can be considered a "real" guide ...to be read in conjunction with the quality of the current assets…

 

[kpc]

For those that may want to know "how much do I need in retirement", I refer you to the Association of Super Funds in Australia (ASFA) Retirement Standard here: https://www.superannuation.asn.au/resources/retirement-standard, an excellent neutral piece on what is considered "modest" and "comfortable" retirement incomes

I don't think 59K pa is nearly enough for the 2 of us

 

[QF WP]

Hm..otoh , I opine that the a liking for growth teat sullies a lot of decision making and may lead to lower "real" returns.

To which you are entitled and there will be others on the other side of the coin...but for all clients, the strategy should be to meet their growth and income objectives. Those that are "doubling down" on growth without any meaningful reviews will get unexpected volatility (however the question will be whether they have actually "booked a paper loss" or are still ahead even after the drop).

I have lost count of the times I have been ear bashed about what fund X ( or client manger y) "did" last year. One year is meaningless. What a fund "does" over ten years with aggregated capital growth AND income can be considered a "real" guide ...to be read in conjunction with the quality of the current assets…

Absolutely. For investment managers, I look for investment style, consistency of returns over relevant time periods (3+ years for growth but the whole range for income) and the longer the fund has been going, the better. Alpha and beta are then important when blending with other managers in a clients portfolio, style similarly so. Reducing the high highs (as well as the low lows) on a volatility measure can be the most important thing for a happy client. Active excess return over the relevant benchmark is paramount.

 

[QF WP]

I don't think 59K pa is nearly enough for the 2 of us

That will be your travel budget

 

[QF WP]

For those that are interested in an analysts focus - a comment from Amit Lohda, Portfolio Manager of the Fidelity Global Equities fund:

a) Stocks always follow earnings and cash flow - focus on them and you will get the stocks right;
b) The person that turns over the most rocks wins the game;
c) In this business, if you are good you will be right six times out of ten - you are never going to be right nine times out of ten - learn to deal with it!

 

[docjames]

Correct. For us in the industry the focus is to "know your client" and advice must be "in the clients best interest". Once the clients situation is understood, then the over-arching strategy is the next important area. This can be a complex combination of a multitude of areas (income, tax, centrelink, insurance, estate planning, debt minimisation, retirement/investment/superannuation, etc). Then products that meet the strategies are considered, compared and the one(s) most appropriate for the client strategies are recommended. Where it's an investment scenario, the importance factors are roughly 90% getting the right money in the right asset sectors at the right time to meet the clients risk profile - only ~10% is which investment manager.

There are some that wish to do all or most of it themselves and to those I wish the best...they are a minority and will never meet my "ideal" client. I want to talk to client that are prepared to seek advice, receive and consider advice, then pay for it. They joys of having whittled down my client base from the heydays of 600+ to now 175. I can now afford to pick the prospects I want to be clients. Relationships are everything.

The challenge for the consumer (client) is finding an advisor who acts this way (without any "inside" knowledge of who to look for / trust).

 

[QF WP]

Agreed, that's where finding someone with ethics, morals and being a member of an association (whether an adviser or industry, it shouldn't make a huge difference) should be forefront (the client is sacrosanct in the relationship). Anybody who's been in the industry a long time should therefore have always been acting this way and will be reflected in their (lack) of sanctions in their ASIC/TPB records. My father made 57 years in the industry and whilst I'm on track to equal it, I won't be trying.

 

[lovetravellingoz]

I know a couple that pull 200k a year from their "super". They still have as much as they started with years earlier. They use a financial planner.

If they started with a $1 million that is very good.

If they started with $10 million that is bad.

 

[JohnK]

I don't think 59K pa is nearly enough for the 2 of us

It should be enough if you're prepared to travel economy.

My goal would be to be able to travel to Thailand twice a year on $1,000/week.

 

[Pushka]

It should be enough if you're prepared to travel economy.

My goal would be to be able to travel to Thailand twice a year on $1,000/week.

But the older you get the less healthy that can be for some people to the extent you might not be able to travel at all if only Y. I know I'd be scared health wise flying long haul (>5 hours) now in Y.

 

[cove]

Kpc you cannot retire. Just put a zero on the $59,000 and you will be fine.

 

[lovetravellingoz]

For those that may want to know "how much do I need in retirement", I refer you to the Association of Super Funds in Australia (ASFA) Retirement Standard here: https://www.superannuation.asn.au/resources/retirement-standard, an excellent neutral piece on what is considered "modest" and "comfortable" retirement incomes

They forgot one column:



[TABLE="class: table table-bordered table-striped, width: 622"][TR][TD="colspan: 2, align: left"]
[/TD][TD="colspan: 2, align: left"] AFF lifestyle[/TD][/TR][TR="bgcolor: #F9F9F9"][TD="align: left"]
[/TD][TD="align: left"]
[/TD][TD="align: left"]Single[/TD][TD="align: left"]Couple[/TD][TD="align: left"]
[/TD][/TR][TR][TD]Total per year[/TD][TD]
[/TD][TD]$93,665[/TD][TD]$159,971[/TD][TD]
[/TD][/TR][/TABLE]

 

[RooFlyer]

For those that are interested in an analysts focus - a comment from Amit Lohda, Portfolio Manager of the Fidelity Global Equities fund:
<snip>
b) The person that turns over the most rocks wins the game;
<snip>

Yay! I win :mrgreen:

 

[JohnK]

But the older you get the less healthy that can be for some people to the extent you might not be able to travel at all if only Y. I know I'd be scared health wise flying long haul (>5 hours) now in Y.

Understand and not a great situation you find yourself in healthwise.

I'll need to re-assess my travel if same thing happens to me. Luckily it's possible to get to Thailand in 5 hour hops via PER/DRW so still a possibility.

 

[sinophile888]

But the older you get the less healthy that can be for some people to the extent you might not be able to travel at all if only Y. I know I'd be scared health wise flying long haul (>5 hours) now in Y.

I am in the same situation, with heart issues.

My daughter and I are off to Europe soon. I am flying EK in J; we are taking 4 days to get to LHR and 5 days to get back from FRA, all day time flights. I wouldn't risk Y even though my daughters return flights in Y are around A$1500 and my costs are around a factor of 4 more.

 

[cove]

LTO I think our cost of living would be pretty high if we were running out of frequent flyer points/miles. Mrscove is quite relaxed about buying tickets.
Just updating our family travel insurance and I was surprised how many flights I paid for on points/miles.
The superannuation problem ( if there is one) is caused by many thinking retiring at 67 will be ok when they don't have an annuity/pension to provide for the many years of life after pulling the pin on working.
There is no official retirement age in most occupations.

 

[amaroo]

In the words of Etta James.... At Last!

A 30-year decline in the share of the population paying more in tax than they receive in benefits has been reversed

 

[amaroo]

Life is good when you share pillow talk with...

1. CA who specialises in tax and super
2. Licensed financial advisor


:mrgreen:

 

[lovetravellingoz]

LTO I think our cost of living would be pretty high if we were running out of frequent flyer points/miles. Mrscove is quite relaxed about buying tickets.
Just updating our family travel insurance and I was surprised how many flights I paid for on points/miles.
The superannuation problem ( if there is one) is caused by many thinking retiring at 67 will be ok when they don't have an annuity/pension to provide for the many years of life after pulling the pin on working.
There is no official retirement age in most occupations.

Now 56, I have actually revised my "retirement" strategy from what I thought it would be when I was 50 of diving from full work into no work (ignoring managing investments) sometime in my late 50's to maintaining some level of work, but in a much more fluid set of circumstances.

One influence was a number of older friends who were fully retired, but who were finding the total lack of work challenging.

So two years ago I started a new business and company where I can dial my time up or down as I see fit, and where I can have large chunks of the year virtually work free if I wish. Plus I have made it mainly cloud based so that I can work anywhere, any hour... Plus work has been destressed as I no longer have any Boards to worry about, nor shareholders. I also do not have any employyes, just contractors and so I do not have to worry at all about all those HR and Employee issues that are the bain of many mangers life and which often take the fun out of many businesses.

So I now spend two months a year travelling, and I do not work full-time the rest of the year. In a couple of years I will probably dial that up to 6 months or so. Not necessarily all in one chunk. At 60-ish I will be say down to 3 months or so and may leave in that way for a while. I will wait and see how I feel about it at the time. $$ wise in super it will keep building without needing to be touched till then. As I could fully retire comfortably now from what I already have in super I will have more than ample funds indefinitely. Moreso as I also have some non-super investments.

With my last 5 week trip in Europe I would spend about 30 minutes on the internet keeping things ticking over. But no other work in the 5 weeks. When in places like Africa or Nepal it was more a total blackout as internet coverage is not as practical.


So my principal focus is now very much quality of life. Enjoying what I do is all very much part of that- family, private life, worklife. If only I could get my football club to come to party life would be complete

Superannuation 101 should not just be about the money!



I think that drron may be doing something similar in terms of his travelling a lot, but still working chunks of the year.

 

[amaroo]

Agree on early retirement. I tried it aged 43 - lasted 4 years. A better fit for me was starting a couple of businesses that keep me busy for around 6 months of the year.