Superannuation Fund.... WTF?

[Sam_Boss260]

Well, just received my statement for the last financial year, and even with the payments that I made during year, my closing balance was LESS than the opneing balance.

Now I heard on the media that superannuation funds took a hit over the last 12 months, but as always I thought "that won't affect me".

Anyone else lose?

[The Yeti]

fraid so

[XR6-VCT-2000]

Don't worry , Im sure with the way this country is going and by the time 90% of people on here retire, they will probably have abolished super completely and we won't see a cent of it anyway.

[Sam_Boss260]

Yeah, you are probably right on that one....

Oh well.

[dave289]

Thats cause for the last few years these funds have been making plenty of money on the stockmarket using your money but you only see a fraction of what they earn with your money.but now the stock market crashes and they want you to wear the cost from what they lost but when they make plenty you only see a fraction of this.

super or not so super,I let you decide.

[Veefore]

Don't worry too much about your super balance today unless you are about to retire. Super is a long term investment and over the course of it's life will still show a reasonable gain. Worrying about every up and down can drive a person to despair. Generally, for stock market based funds there will be one year in every 5-10 that will show a negative growth, but this is more than offset by the positive growth of those other years.

Unless you have only just started a Super account you still have more in your account than you have actually put in to it through your SG Conts. If you have just started then fees attracted by the fund might have eaten into it a little.
Also, if you have just started a Super account, you can expect at least another 3 or 4 periods of negative growth to come over the life of your account. This will happen no matter who you invest with. It is just a fact of life when dealing with market based investing.

When the paper value of those stocks rises again your balance in your super account will rise with it.

Also, the way that the Super laws are structured in this country the funds don't have the option of pulling out of the market if it looks like going bad. This is a good thing overall as it prevents the panic selling like we saw in '87 that flattened the market and sent many people to the poor house.

[King Nothing]

Originally Posted by Veefore

Don't worry too much about your super balance today unless you are about to retire.

Too bad if you are about to retire. I'm not (only 23), but I know people who have been burnt by super losses at the almost worst possible time.

[TZENU]

Super is just one of many ways in which you can fund your retirement... Throwing all your eggs in one basket is not one of them!

[ieatsports_cars]

my unty lost over $ 60,000 in super over the last 12 months so it has affected their time when they are going to retire ! it stinks that you work hard for your money to have when you retire and the government is trying to incourage you to put your money into super and this happens is it really worth putting your money in super ??

[sgt_doofey]

Originally Posted by ieatsports_cars

is it really worth putting your money in super ??

Yes, but read what TZENU wrote:

Originally Posted by TZENU

Super is just one of many ways in which you can fund your retirement... Throwing all your eggs in one basket is not one of them!

[King Nothing]

Originally Posted by TZENU

Super is just one of many ways in which you can fund your retirement... Throwing all your eggs in one basket is not one of them!

Not saying that they did, they have a range of investments. Still, losing several tens of thousands is never good.

[Sam_Boss260]

Super is not my only basket so to speak. But still disappointing when you see the balance and it is less than the opening balance......

[Veefore]

Originally Posted by King Nothing

Too bad if you are about to retire. I'm not (only 23), but I know people who have been burnt by super losses at the almost worst possible time.

It is unfortunate if you are about to retire at around the same time that the market has a downturn but that is just a fact of life when it comes to investing for the future. There will be many market rises and falls in your lifetime. Some of the BIG rises and BIG falls. The beauty of super is that the longer you are in super the less these downturns will affect you in real terms.

If you were about to retire, and had your super for more than 20 years you would still have averaged around 10% on your investment, even with this years drop. Remember, this years losses are only about equal to last years gains. So, in essence, the "interest" portion of most super accounts has had a 2 year setback. It is like any other investment. The only things that haven't gone down are fixed interest accounts and over the long term they are the lowest returning investments you can make. If you had money in a market based account for only the last 3 years you would still still be in front, even with this years drop, than you would have been if your money was in fixed interest.

If you want more information about super contact your fund or try GESB . They have a good site and it explains a lot of stuff that may not be common knowledge.

[ebxr8240]

I would say its not really money lost.. Its money not made ..
Your not alone.. The last investment property I bought for $330K is worth around $280k if I sold it now..Look at it over 10 years...

[GT0132]

Originally Posted by Sam_Boss260

Super is not my only basket so to speak. But still disappointing when you see the balance and it is less than the opening balance......

I'm so happy...the lower it goes means my ex wife gets less of my super in our divorce settlement

I'm the same....my firm contributed $12 grand last year and the closing balance at 30 June 2008 is less than what it was on 1 July 2007

[GT0132]

Originally Posted by ebxr8240

I would say its not really money lost.. Its money not made ..
Your not alone.. The last investment property I bought for $330K is worth around $280k if I sold it now..Look at it over 10 years...

It's money lost if the decline in fund value exceeds the value of the contributions made...How could it not be?

[Sam_Boss260]

Originally Posted by ozmale42

I'm so happy...the lower it goes means my ex wife gets less of my super in our divorce settlement

I'm the same....my firm contributed $12 grand last year and the closing balance at 30 June 2008 is less than what it was on 1 July 2007

Silver lining in every cloud eh Pete ??? Classic line mate.

[Sam_Boss260]

Originally Posted by ozmale42

It's money lost if the decline in fund value exceeds the value of the contributions made...How could it not be?

Agreed. The loss was GREATER than the funds that I put in. So it well and truly went backwards....

[Duke]

I gave up on super contributions about 13 years ago. I preferred to put all my money into something that I control - property - shares - options etc.

I'm of the view that the gov't can and will change regulations on super as they see fit and if you don't have a say in accessing your own money - why the hell would you put your hard earned in there?

Imagine in 20 years time the gov't of the day only lets you take a drip feed and not lump sums - bugger that!

In 20 years if I want to sell a property - then damn it, I will!

Oh, and one last thing - in 13 years I created multi million dollar portfolio - what chance of that happening with your super?

[pauljh74]

I heard something very recently saying that alot of funds lost on average approximately 6% - this is in the more conservative "balanced" funds. Most people by default would be in a balanced fund. The higher risk funds would have lost more.

[GT0132]

Originally Posted by Duke

I gave up on super contributions about 13 years ago. I preferred to put all my money into something that I control - property - shares - options etc.

I'm of the view that the gov't can and will change regulations on super as they see fit and if you don't have a say in accessing your own money - why the hell would you put your hard earned in there?

Imagine in 20 years time the gov't of the day only lets you take a drip feed and not lump sums - bugger that!

In 20 years if I want to sell a property - then damn it, I will!

Oh, and one last thing - in 13 years I created multi million dollar portfolio - what chance of that happening with your super?

Your employer is compelled to make contributiuons to a super fund by law so you're not at liberty to direct your employer to stop contributing and give you the cash instead so you can make your own investment decisions.

However you can generally choose the investment mix by reference to the fund manager of the super fund. i.e I have a third of my super in a balanced fund, another third in international shares and another in fixed interest. The international share segment has performed consistently poorly since 2001 to the point I've lost a third of its value.

If it was my companies money then I couldn't care less about the loss. However compulsory super these days is built into a salary package so in effect it's me that pays for it indirectly.

Super has great tax advantages versus direct investments. Where else can you get a tax deduction for the capital cost of an investment like you can with super? with the added benefit of the income stream taxed at 15% versus 46.5% if you earned the income yourself. (when the fund is making positive returns might I add!)

If it's some consolation, the beauty is once these fund start making good returns they will be able to offset any future capital gains tax liabilities with the capital losses they've sustained in recent times which will effectively reduce the tax on investment returns to zero until the tax credits have been fully utilised. Those who move out of these funds now won't enjoy those benefits.

Despite the recent decline most funds have returned, on average, 12% p.a "tax paid" over the past 5 years. To get that sort of return outside super you would have had to have earned 20% p.a on that other investment not to mention having to fund the capital cost of that investment in after tax dollars, unlike a contribution to a super fund.

The only downside with super IMO is having the money locked away until you retire. However it's at that time when we're all gonna need the cash, so it's not such a bad thing in retrospect. Everything else is all good

Cheers

[ebxr8240]

Originally Posted by ozmale42

It's money lost if the decline in fund value exceeds the value of the contributions made...How could it not be?

You are correct but over some years there would have been in excess of 10% interest etc.. There seems to be about a 7 year rotation with realeastate/ superfunds payout or value.. If the money was taken out and invested in stock exchange it would have devalued also..
The new rules help super funds.. But its only appreciated from 55 and over when you can do something about it..
This is a good thread.. Atleast DO SOMETHING!! I'm possibly one of the older guys on here.. Mybe not super as in extra but invest in something.. Worry about the long term.. My super is working o/k for me but I'v been in it for nearly 30 years paying 8% of my wages...

I'm hearing some crazy things. Not sure if everyone feels the way a lot of the people on here feel, but as a fully accredited Financial Planner specialising in Super, this is all crazy talk.

Now's the best time for super. Anyone who needs their super in these few years should not have been so heavily exposed, they should fire their financial planners and find one who's completed year 12.

Good call about the 7 year cycle. It's been proven that nothing gives a return as good as the market (on a macro level) over a 7 year period. I'm talking about the market basket and it's a generalisation that has held for the last 150 years.

Any specific questions I'll answer, but I certainly hope the opinion here isn't representative of the general population. It's your future nest egg, you should know everything about it (but then, my view's a bit biased).

[Veefore]

Originally Posted by Shounak

Any specific questions I'll answer, but I certainly hope the opinion here isn't representative of the general population. It's your future nest egg, you should know everything about it (but then, my view's a bit biased).

Sadly, it is the view of the general population. Super is the most misunderstood investment in this country.
I have now left the industry, but some of the questions I got when I was there would just blow your mind.

[JC]

Originally Posted by ieatsports_cars

my unty lost over $ 60,000 in super over the last 12 months so it has affected their time when they are going to retire ! it stinks that you work hard for your money to have when you retire and the government is trying to incourage you to put your money into super and this happens is it really worth putting your money in super ??

I would bet that the money they have invested is safe - the "losses" are just when they compare to last year; if they compare to 2 years ago, you will find that they have probably still gained overall.

[JC]

Originally Posted by ozmale42

The only downside with super IMO is having the money locked away until you retire. However it's at that time when we're all gonna need the cash, so it's not such a bad thing in retrospect. Everything else is all good

Cheers

Without self funded retirees, our children would be paying so much tax just so that we can get a pension, that it wouldnt be worth their while working. Super is good, just the year to year fluctuations arent always great!

[gcg2503]

Originally Posted by Duke

Oh, and one last thing - in 13 years I created multi million dollar portfolio - what chance of that happening with your super?

Great work Duke