Superannuation Discussion + market volatility

[andye]

My feeling is that very many ordinary people (with high, medium or low incomes) do not have the foresight and discipline to save the large sums required to avoid reliance on the pension. Hence the tax-incentives within super.
I am sure the reasons that Australians have the highest median wealth in the world is due to the historical high levels of home ownership and compulsory super. More still needs to be done to make the former continue

 

[LadyC]

I am luckily to currently be a member of a defined benefit scheme. Once that is no longer the case, I will definitely set up a SMSF.

 

[k_sheep]

I have life and income protection insurance outside of my super. And with the changes to SMSF it's not actually a better option in my scenario.

Oh look I think super in general is a necessary evil ... as has been said, most people are bad at saving and investing. I'm just been an entitled millennial or Gen Y or whatever we are this week

 

[Flying mermaid]

I have life and income protection insurance outside of my super. And with the changes to SMSF it's not actually a better option in my scenario.

which changes?

 

[JohnK]

I am sure the reasons that Australians have the highest median wealth in the world is due to the historical high levels of home ownership and compulsory super. More still needs to be done to make the former continue

Allowing foreign ownership has increased the cost of property exponentially and out of reach of most young people without a helping hand.

I believe the cost of "slummy" 2 bedroom units on Canterbury Road is $500,000+. Ridiculous.

 

[cove]

A lot of superannuation money has not found a path to fund infrastructure projects.
We still lack high speed trains between the most populated cities.
We haven’t worked on transferring water from far North Queensland to areas that are drought stricken.
All we got was an out of date NBN where that debt will need to be written down or off.
Retirement money is a necessary evil as we cannot expect our children and grandchildren to pay for all of us until we drop off the perch. There just won’t be enough new taxpayers to do that.

 

[Pushka]

A lot of superannuation money has not found a path to fund infrastructure projects.
We still lack high speed trains between the most populated cities.
We haven’t worked on transferring water from far North Queensland to areas that are drought stricken.
All we got was an out of date NBN where that debt will need to be written down or off.
Retirement money is a necessary evil as we cannot expect our children and grandchildren to pay for all of us until we drop off the perch. There just won’t be enough new taxpayers to do that.

And most of us here are aiming to be financially independent which is why it annoys the heck out of me when the politicians fiddle and suck the life out of those aims.

 

[lovetravellingoz]

Allowing foreign ownership has increased the cost of property exponentially and out of reach of most young people without a helping hand.

I believe the cost of "slummy" 2 bedroom units on Canterbury Road is $500,000+. Ridiculous.

Personally I tend to believe that allowing negatively gearing on rental properties has had a way bigger effect. With low interest rates as well, the investor segment has outbid and pushed our the young people. Foreign ownership has added to it, but the home grown investor market has been a larger cause.

 

[JohnK]

I can understand that point of view, but I guess it was brought in to assist the many who weren’t capable of looking after themselves. Have you considered starting a SMSF, so at least there are no middle men in the mixture? We started our SMSF when we were 34 and it has worked out well for us.

Most companies will pay into an SMSF, so you will have the fun of investing the money as it comes in, keeping fees down and seeing your money grow.

The biggest mistake with forced superannuation was allowing those middle men to take a huge slice of the pie.

I started saving late at 38 and had a few years I was out of work but have had quite a decent salary in those years and without me pouring in extra money there won't be a lot there when I retire.

 

[Flying mermaid]

Personally I tend to believe that allowing negatively gearing on rental properties has had a way bigger effect. With low interest rates as well, the investor segment has outbid and pushed our the young people. Foreign ownership has added to it, but the home grown investor market has been a larger cause.

when Ms FM bid on her house at auction 4 years ago, there were quite a few bidding. Almost all dropped out at 405,000 and it was just her and an older guy bidding. It pushed up to 436,000 between them, we had literally made the last bid we were prepared to go to ( and it was 16,000 over what we were hoping to pay), when the guy came over to us had a long stare at Ms FM and her partner and then announced he was an investor and it was clear this was a young couple buying their own home, so he was going to drop out. He got a big clap for that and they got the house.

I must admit I felt like saying “couldn’t you have done that 20k ago”, but it was nice and I reckon the same house would cost them 1000,000 more now so they were very lucky.

 

[amaroo]

when Ms FM bid on her house at auction 4 years ago, there were quite a few bidding. Almost all dropped out at 405,000 and it was just her and an older guy bidding. It pushed up to 436,000 between them, we had literally made the last bid we were prepared to go to ( and it was 16,000 over what we were hoping to pay), when the guy came over to us had a long stare at Ms FM and her partner and then announced he was an investor and it was clear this was a young couple buying their own home, so he was going to drop out. He got a big clap for that and they got the house.

I must admit I felt like saying “couldn’t you have done that 20k ago”, but it was nice and I reckon the same house would cost them 1000,000 more now so they were very lucky.

We had a similar experience trying to buy an investment property a few years ago. It was standard sale rather than auction. We were talking to the agent over a couple days with a few offers, one afternoon I bumped into a couple we knew though our children .... they starting explaining how they were buying a house, up against an investor, etc, etc - yep, the penny dropped. It was the same house.

I wished them luck with the purchase and walked away.... called the agent and pulled all offers. They ended up buying the property, and it's still their home. Have never told them we were the other bidders..... been to their house a few times for dinner/drinks. It's not that hard to do the right thing!

 

[Flying mermaid]

We had a similar experience trying to buy an investment property a few years ago. It was standard sale rather than auction. We were talking to the agent over a couple days with a few offers, one afternoon I bumped into a couple we knew though our children .... they starting explaining how they were buying a house, up against an investor, etc, etc - yep, the penny dropped. It was the same house.

I wished them luck with the purchase and walked away.... called the agent and pulled all offers. They ended up buying the property, and it's still their home. Have never told them we were the other bidders..... been to their house a few times for dinner/drinks. It's not that hard to do the right thing!

thats really nice!

 

[JohnK]

thats really nice!

Unlike my best friend many years ago who pushed me to make a bid on an apartment he didn't want and when I made a bid and then a second bid he got angry and asked me to stop increasing the bids as he was going to buy the apartment.

I walked away as I didn't want to damage the friendship but he was selfish and was for most of his life. He was also very lucky with every investment decision and was probably worth $3-$4 million when he died almost 7 years ago.

And no I don't believe in karma.

 

[Pushka]

Unlike my best friend many years ago who pushed me to make a bid on an apartment he didn't want and when I made a bid and then a second bid he got angry and asked me to stop increasing the bids as he was going to buy the apartment.

I walked away as I didn't want to damage the friendship but he was selfish and was for most of his life. He was also very lucky with every investment decision and was probably worth $3-$4 million when he died almost 7 years ago.

And no I don't believe in karma.

Well, he's gone now and you are not. Maybe luck isn't just about the money. Would you want to trade places?

 

[JohnK]

Well, he's gone now and you are not. Maybe luck isn't just about the money. Would you want to trade places?

Logic says I wouldn't want to trade places but curiosity says we have no idea what's on the other side and the alternative could be better.

If I'm wrong then the result of this conversation is irrelevant in the long run.

 

[OZDUCK]

We had a similar experience trying to buy an investment property a few years ago. It was standard sale rather than auction. We were talking to the agent over a couple days with a few offers, one afternoon I bumped into a couple we knew though our children .... they starting explaining how they were buying a house, up against an investor, etc, etc - yep, the penny dropped. It was the same house.

I wished them luck with the purchase and walked away.... called the agent and pulled all offers. They ended up buying the property, and it's still their home. Have never told them we were the other bidders..... been to their house a few times for dinner/drinks. It's not that hard to do the right thing!

We weren't quite as nice. When we were selling my late MIL's house we ended up with two offers at the same price. One was from a developer who would settle immediately with cash and the other was from a young guy buying his first house and who required about a month to get loans etc together. We had a chat and sold it to the young guy as my wife hoped he would enjoy the house and not just knock it down - it is still standing.

 

[k_sheep]

which changes?

Tax hit for $200b in DIY super Further taxing on the balance.

 

[andye]

Such (>$1.6m) balances are not really in the saving for a comfortable retirement realm and definitely not stopping people being reliant on the pension. There is still a tax benefit, just not as generous

 

[Flying mermaid]

Tax hit for $200b in DIY super Further taxing on the balance.

wouldnt apply to you or for most with an SMSF. you just need to make sure you never accumulate more than 1.6. It hit those who had millions in super. And the transition to retirement was a bit of a lurk. Everything else remains intact - you can still retire with 1.6 million in super and all the income is tax free.

Of course the question is what next will they change - can’t keep their sticky fingers off it. However changes apply to both industry funds and smsf - the only case where it might not, is the latest proposed change, where it appears retirees in industry funds will get franking credits while those with smsf will not.

Running your own smsf is a bit of work and you have to enjoy investing, but it does get rid of the middle men.

 

[cove]

I tried to remain under the. $1.6 million per person level in our SMSF and drawing pension payments is not too hard.
I would have preferred a higher level as my wife has family who have lived into their nineties.