Superannuation Discussion + market volatility

[Deleted member]

Well with the rebound all 3 of my super funds (Fees are small apart from % fees and so I am happy to pay the very small extra $ for reduced risk and greater choice from having 3 funds) are all basically back where they were almost.

The wife's super fund (different again) is also basically back where it was.

So a lot happier than I was at Christmas time

The sme result can be acheived with a diverse investment strategy in a single super fund

 

[cove]

Am looking forward to a pretty good tax refund this year from franking credits.

 

[lovetravellingoz]

The sme result can be acheived with a diverse investment strategy in a single super fund

Though the risk is higher.

If the sme fund manager (me) has a brain fade or is out of contact in Africa things may not go well.


In my case too my wife has never taken to finance and so if something happens to me she would be in a difficult situation.


Each to their own of course.

PS. I also run a large share portfolio that I am starting to unwind but will moreso do post retirement.

 

[JohnM]

Am looking forward to a pretty good tax refund this year from franking credits.

Savour it @cove - it may be your last...

 

[cove]

Yes I know JohnM.
I have eliminated all debt other than our social housing projects and I reduced that debt too.
Lucky it's only money.....

 

[burmans]

Am looking forward to a pretty good tax refund this year from franking credits.

Is that an enjoy it while you can that you are implying here?

 

[cove]

Yes I already know that I may have to switch out of some investments in my SMSF but I can enjoy it for a bit longer. The almost zero tax rate versus the 47% top personal tax rate should not be totally ignored.
There is a pretty good chance that Australia will lurch into a recession no matter which group wins the 2019 election.

 

[I love to travel]

Why do you think that?

 

[cove]

All you need for a recession is where the public get scared and stop spending. We have that in WA but it may not spread to other States.

 

[tgh]

The next recession will probably hit very hard as folks continue to price for perfection and assume that someone will bail them out.
I find it hard to see genuine safe havens that are not cost/tax/earnings prohibitive

A Shorten government faced with a collapsing economy will blame the wealthy, bring in some additional onerous taxes to hand out to the chattering classes and fail completely at shoring up the economy.
If it gets muddy enough they would not hesitate to force folks to purchase bonds, it is not unknown
Anyway…. after that unpaid political announcement, I get to the point.

We should all, whatever our financial status, have a what if plan.
There is a tendency to assume a recession is the worst case scenario, whereas there are real risks of disaster and anarchy.
The low probability does not negate the reality.. we should all give some thought to a doomsday and how we might survive.

Herewith endeth the sermon...

 

[cove]

Pretty much the only reason we don’t cash out our SMSF is because of the tax status it has compared with our 47% incremental tax rate personally.

 

[andye]

I'm not 100% sure of the rules (or cove's exact retirement position) but aren't many high-earners likely to be paying at least some tax in retirement that could continue to be offset in franking credits

 

[cove]

Yes we keep paying the ATO. I can get around the Labor proposal but many may not know what to do and when.

 

[tgh]

may not know what to do and when……….thats me….

Labour may not win ; they may not get their changes through the senate ; they may Grandfather it…..
So many things "may" happen, and every change I make will stuff up a very carefully built structure.
Folks will take advice and many will make changes ,whatever the cost.
The change options and the consequences are significant.
I may well "arise" and campaign at my local polling station, something I have never done in a lifetime of conservative support.

 

[Pushka]

may not know what to do and when……….thats me….

Labour may not win ; they may not get their changes through the senate ; they may Grandfather it…..
So many things "may" happen, and every change I make will stuff up a very carefully built structure.
Folks will take advice and many will make changes ,whatever the cost.
The change options and the consequences are significant.
I may well "arise" and campaign at my local polling station, something I have never done in a lifetime of conservative support.

If it’s any consolation my accountant said exactly the same last week. He doesn’t think it will get through the senate. So many unknowns.

 

[CaptJCool]

Well for those that have excess funds above their maximum super cap, insurance bonds are coming back strongly in favour. Had a very interesting session with Generation Life today over lunch at the BNE Hilton:

View attachment 152911 View attachment 152912 View attachment 152913

I gather insurance bonds have the ten year rule ? Of zero tax at the other end ? Hefty early exit fees?

Also, would a super re-contribution strategy do the same trick ?

What is a Super Recontribution Strategy? | Canstar There doesn’t seem to be anything in it to do with tax deductions ? Which I gather is part of the reason for doing so ?

 

[QF WP]

Yes they are tax paid after 10 years, amongst other rules like the 125% contribution rule (where you can contribute up to 125% of the previous years contribution without starting the 10 year rule).

 

[Deleted member]

Though the risk is higher.

If the sme fund manager (me) has a brain fade or is out of contact in Africa things may not go well.


In my case too my wife has never taken to finance and so if something happens to me she would be in a difficult situation.


Each to their own of course.

PS. I also run a large share portfolio that I am starting to unwind but will moreso do post retirement.

No, the point is that the risk is lower than the all of your eggs in one basket mentality. That’s kinda what “diversification “ means
However I get your point if you are the sole (DIY) investment manager.

 

[Deleted member]

I gather insurance bonds have the ten year rule ? Of zero tax at the other end ? Hefty early exit fees?

Also, would a super re-contribution strategy do the same trick ?

What is a Super Recontribution Strategy? | Canstar There doesn’t seem to be anything in it to do with tax deductions ? Which I gather is part of the reason for doing so ?

Insurance bonds are a great extension to superannuation planning (non concessions top up) for the following reasons, 1 the funds are Not preserved, 2. They have tax paid status (not tax free per se) while you’re in accumulation mode 3. They are effectively tax free after 10 years .
They are in effect a version of the old “pure endowment “ life insurance policy.
No hefty fees to exit either.

 

[cove]

Most folks have not realized that there are many retired folks who rely on franking credits to supplement their pensions. They will be hoping their children can help them if they lose this money and that affects the next generation who are probably in an age range of 40 to 65. This cascading problem has not been thought out too well. I think of this as a mean thought bubble and needs to be fought off sooner rather than later.