Superannuation Discussion + market volatility

[Pushka]

There are all sorts of options available - e.g. keeping shares that are long term holds and pay franking dividends in personal names, so the excess franking credits can be used to offset investment property rent. Keep stocks that are more short term and will be sold in the super fund so no tax on any capital gain. It certainly changes the investment thesis when looking at returns on stocks.

But that assumes there is other income like rent - ie holding an investment property - to offset against. While it’s irrelevant now for me, the advice when planning for ‘pension stage’ in smaller SMSF was all about stability and holding good dividend paying shares.

I think it’s a Monty that Labor will Win and the legislation will happen pretty much immediately.

 

[lovetravellingoz]

.

I think it’s a Monty that Labor will Win and the legislation will happen pretty much immediately.

I too think Labour will win in the Hose of Reps. BUT for the changes to go through Labour will need it to pass the Senate. So one has to guess which way the independents would vote on this, Greens will probably go with Labour.

 

[Pushka]

I too think Labour will win in the Hose of Reps. BUT for the changes to go through Labour will need it to pass the Senate. So one has to guess which way the independents would vote on this, Greens will probably go with Labour.

Well no doubt there will be lots of deals done to ensure it gets through. With all of the independents.

 

[Flying mermaid]

Well no doubt there will be lots of deals done to ensure it gets through. With all of the independents.

there will be lots of deals done, but the independents have a history of balking on some issues. Impossible to say which way they will go.

My comment about rent was a general comment to demonstrate the sort of restructuring that could take place - I too have no property in my own hands that could be used to offset tax credits. However I am doing a lot of thinking about what to do.

Like most retirees fully franked dividends was a central plank of my retirement strategy and I am pretty upset that 6 years after I retired when I no longer have any ability to go back and earn more money, everything changes with no grandfathering of changes. Unlike for all the other proposed changes from Labor.

Fortunately I enjoy share investing, so a pivot away from franked dividends towards capital gain wouldn’t be difficult.

 

[Pushka]

there will be lots of deals done, but the independents have a history of balking on some issues. Impossible to say which way they will go.

My comment about rent was a general comment to demonstrate the sort of restructuring that could take place - I too have no property in my own hands that could be used to offset tax credits. However I am doing a lot of thinking about what to do.

Like most retirees fully franked dividends was a central plank of my retirement strategy and I am pretty upset that 6 years after I retired when I no longer have any ability to go back and earn more money, everything changes with no grandfathering of changes. Unlike for all the other proposed changes from Labor.

Fortunately I enjoy share investing, so a pivot away from franked dividends towards capital gain wouldn’t be difficult.

Once someone has retired then it’s disgusting that the rules can be changed so significantly. While the Pollies sit back knowing they have the fat, tax payer funded pensions all stitched up.

 

[tgh]

My hip pocket thinks it can smell smoke, but I can't hear the violins

yet...

 

[cove]

If Labor win the unloseable election we may get to pay extra taxes as the shadow treasurer keeps saying stuff to prove he is a complete donkey.
I guess we can put the extra taxes on a credit card.
Yes retirement strategies will need to be revisited.

 

[Buzzard]

I'm thinking of off loading most of my shares. I can't think of a time when Labor was in and the economy didn't tank. Hopefully I'm wrong.

 

[tgh]

I agree that labour will likely plunge us into recession, who will they blame I wonder….
These big swings are certainly an emotional roller coaster ride , but we sat tight through 08 and sold 0
It all came roaring back .. always does.
We will also sit this one out whatever happens.


I

 

[Flying mermaid]

I agree that labour will likely plunge us into recession, who will they blame I wonder….
These big swings are certainly an emotional roller coaster ride , but we sat tight through 08 and sold 0
It all came roaring back .. always does.
We will also sit this one out whatever happens.


I

very sensible - fortunately we were still working in 08 and still contributing. I bought shares in Feb 2009 which did very well. Markets always come back again (although not every share), so holding and waiting pays off. You still need income during recessions though, so that is an issue. Can’t pivot too heavily to capital gains shares, otherwise I could find myself with no income and not wanting to sell anything. Might have to send Mr FM off to work

 

[I love to travel]

I am thinking about accelerating my plans to buy an investment property though as labour have promised to grandfather new rules

 

[get me outta here]

I think I heard that the “debt and deficit distaster” has gone up by a factor of 3 in the past 6 years. We don’t hear much about that any more. It was such a catchy slogan too.

 

[QF WP]

"It's been a long summer, but now winter is coming", akin to every time the markets have gone up, hit their peak and then declined (all with different time frames). Similarly, interest rates will be going up broadly across the developed countries and long bonds funds will suffer losses, so time to look at the short end of the fixed interest market - secured debt will be better than holding corporate bonds (given they rank higher on the capital return structure).

I have been researching and changing my recommended portfolios for clients in the lead up to the market movements - mine was the first one I changed. The most difficult time will be in the first year of the downside for retirees, when returns (whether capital and/or income) may not match their minimum withdrawal rates, so a decline in capital is likely. But their downside will most likely be lesser than the markets (depending on their asset allocation). May be closer to 1994 than 1987, or 2000, or 2007.

 

[Pushka]

"It's been a long summer, but now winter is coming", akin to every time the markets have gone up, hit their peak and then declined (all with different time frames). Similarly, interest rate will be going up broadly across the developed countries and long bonds funds will suffer losses, so time to look at the short end of the fixed interest market - secured debt will be better than holding corporate bonds (given they rank higher on the capital return structure).

I have been researching and changing my recommended portfolios for clients in the lead up to the market movements - mine was the first one I changed. The most difficult time will be in the first year of the downside for retirees, when returns (whether capital and/or income) may not match their minimum withdrawal rates, so a decline in capital is likely. But their downside will most likely be lesser than the markets (depending on their asset allocation). May be closer to 1994 than 1987, or 2000, or 2007.

It’s a bit sad the OZ market didn’t recover the same as the US market though if you only had access to purchasing shares in the Oz market. I could not get NAB to get our super fund sorted to buy US shares.

 

[QF WP]

A follow on from my post above, straight from a presentation last week by Grant Samuel Funds Management:

1. Review exposure to both bonds and equities, look for:

- absolute return or unconstrained styled managers
- active equity managers with proven "stock picking" capability, preferably with long/short characteristics (value based managers rather than growth managers)
- Alternatives including private equity, private debt and hedge funds
- avoid bond proxies
- $AUD looking vulnerable - house prices, high household debt, trade wars, China etc.

Diversify, diversify, diversify...

 

[Pushka]

A follow on from my post above, straight from a presentation last week by Grant Samuel Funds Management:

1. Review exposure to both bonds and equities, look for:

- absolute return or unconstrained styled managers
- active equity managers with proven "stock picking" capability, preferably with long/short characteristics (value based managers rather than growth managers)
- Alternatives including private equity, private debt and hedge funds
- avoid bond proxies
- $AUD looking vulnerable - house prices, high household debt, trade wars, China etc.

Diversify, diversify, diversify...

And Diversify is why I just went onto HESTA as by paying off a mortgage with Super I didn’t have the funds to do that anymore.

 

[JohnK]

With gambling sometimes you win and sometimes you lose.

Shares are the same. Someone has to lose.

 

[Pushka]

With gambling sometimes you win and sometimes you lose.

Shares are the same. Someone has to lose.

And someone must therefore win.

 

[Buzzard]

Further to my post up thread, by selling I wouldn't be getting out of the share market as such. Just considering converting to cash and getting back in later. True that you can't pick the top or the bottom, but just getting back in for less than I got out. As an example if CBA goes below $60 I'd buy. This is not advice, simply for illustration purposes.

 

[andye]

With gambling sometimes you win and sometimes you lose.

Shares are the same. Someone has to lose.

I disagree with you there JohnK.
Picking individual stocks can be akin to gambling but if you look at the stockmarket through history, the overall trajectory is upward (and well above inflation). Therefore more have won than lost.
There is a lot to be said for investing in broad-based index-funds and trading minimally
This is more like investing in a bookmaker, who always seems to come out on top in the end, despite some big payouts.

Edited: as thought better of comment on superfund activity