• Australian (ASX) Stock Market Forum

Hello and welcome to Aussie Stock Forums!

To gain full access you must register. Registration is free and takes only a few seconds to complete.

Already a member? Log in here.

ETFs in SMSF

Discussion in 'Beginner's Lounge' started by Mike77, Aug 15, 2018.

sentifi.com

Aussie Stock Forum Sentifi Top themes and market attention on:

Tags:
  1. Mike77

    Mike77

    Posts:
    3
    Likes Received:
    0
    Joined:
    Aug 11, 2018
    Hi Team,

    I have recently settled a Property transaction within my SMSF...leaving me with approx $400k in the SMSF Savings account.

    I have a query re the mechanics of my next investment strategy.

    I am comfortable I have some good real estate investments outside my Super, so would now like to achieve some compound growth within my SMSF without the fund taking out a loan to buy another property.

    I am looking at a 10 - 15 year strategy.( I am 40)

    I am struggling to see the big difference in risk & opportunity between shutting down my SMSF and putting it all in a Hostplus style Managed fund and then upping my wife & I's contribution to max threshold per year ( i would be happy with 9% compound growth :)

    OR

    Spread it over 3 or 4 Index Tracking ETFs and do the same?

    Is there any major pros & cons for either....or is there another option to consider?

    thanks

    mike
     
  2. HelloU

    HelloU

    Posts:
    923
    Likes Received:
    294
    Joined:
    Jan 3, 2018
    for info...
    was reading along and then hit this part.....as you seem to attach this to 'Industry Type Funds' exclusively in the post.
    Everyone can now contribute up to the concessional 25K threshold in any complying fund as the old 'income' rules are gone....
     
  3. Mike77

    Mike77

    Posts:
    3
    Likes Received:
    0
    Joined:
    Aug 11, 2018
    Yep...that is part of the Plan now we have our Debt outside of Super sorted we are looking at pumping Max into Super.
    I like the idea of keeping the SMSF going and investing in ETFs....but 8% industry super funds returns over 20 years sounds pretty basic...kinda set and forget?
    I also understand there are higher fees with an Industry fund.
     
  4. HelloU

    HelloU

    Posts:
    923
    Likes Received:
    294
    Joined:
    Jan 3, 2018
    no brainer for inclusion in your thoughts....cannot add to ur overall thoughts but u r correct when implying industry funds do not do it for free...(include non industry in that as well)...and would require some investigating for the $$ tipping point for this. Change of govt would be another investigation.....
     
  5. greggles

    greggles I'll be back!

    Posts:
    2,422
    Likes Received:
    1,192
    Joined:
    Jul 28, 2004
    Hi Mike, both options sound pretty good to me. It's difficult to know where you'd get better returns, so perhaps you might consider splitting the funds and putting half into each option. It's easy to exit from an ETF if you want to switch those funds into a managed fund down the track.
     
  6. MarketMatters

    MarketMatters

    Posts:
    73
    Likes Received:
    36
    Joined:
    Aug 14, 2018
    Firstly no strategy is set and forget (even industry and retail funds). Having been 25+ years in the industry I can assure you that you need to keep reviewing the investment strategy to ensure it remains in line with your expectations.

    I admire your desire to commit the maximum funds to super as essentially super remains one of the most attractive tax vehicles compared to other options. Additionally, take advantage of the simple rule of dollar cost averaging to avoid dropping all funds in at the wrong time (yes there is value in market timing but not easy).

    Remember ETF's carry a small fee (expense ratio) which can be equivalent to super funds or more depending on the underlying investment strategy.

    Don't be fooled by the impression that industry funds are index huggers. They can employ substantial sums to direct property (not listed) which can smooth out their returns given valuations are primarily undertaken annually as opposed to daily. Some are employing active managers in Australian equities whilst others have undertaken to build their own investment teams reducing the costs of external management (reduces costs).

    Ultimately it comes down to time, the level of involvement you wish to employ, and sophistication of investments. If seeking to retain the SMSF then also look for alternative investments to assist build your wealth not otherwise available in industry/retail funds ie. short ETF's to protect downside.

    Well done on your efforts thus far.
     
  7. Mike77

    Mike77

    Posts:
    3
    Likes Received:
    0
    Joined:
    Aug 11, 2018
    Many Thanks for your considered replies.

    Its a big decision for me and I appreciate the input!

    Being a carpenter by trade I have always been comfortable with property...our home, and two investment properties have been carefully selected and then renovated.
    I am comfortable with property and it gives me comfort walking into my home...or driving past one of our investment properties and seeing a young family in there and knowing they are in good locations and have always rented instantly.

    Now i am out of my comfort zone with this 400k in my SMSF.

    I know I need to put it some where as it is going backwards in a Bank account.

    I am weary of the ongoing 1% fees of a Financial planner & other associated costs of SMSF to invest it on my behalf (about $5-6k p/a) thats alot of lost compound growth over 15-20years!!!...but would kick myself if I tried on my own and lost 20 - 30% by making a wrong move!!!

    I also think that putting in a retail fund could be considered a cop out?...a trusted advisor of mine has always said...Easy Now, Hard Later...Hard Now ,Easy Later.

    Despite my eagerness to learn...i can't see myself getting 30 years investing experience in 6 months!!

    Once again I appreciate your input and ongoing comments.

    m
     
  8. sptrawler

    sptrawler

    Posts:
    11,930
    Likes Received:
    2,556
    Joined:
    Jul 3, 2009
    You may also wants to look at LIC's, in a way similar to etf's but more focused on dividends, some have dividend re investment.
    Just another thought.
    Also I run my SMSF through an online accounting firm, costs approx$1,000/annum, including audit and tax lodgement. It may be worth checking around, prices vary greatly.
     
  9. MarketMatters

    MarketMatters

    Posts:
    73
    Likes Received:
    36
    Joined:
    Aug 14, 2018
    If you are not really interested in reviewing/monitoring shares and related investments on a reasonable time basis and concerned you are making the wrong decision by losing possibly 30% then I think you have your answer. That may also mean that the SMSF is not right structure at the present time. Doesn't mean to say you can't open it up again in the future. Don't become emotionally attached to it.

    Happy investing.
     
    sptrawler likes this.
Loading...

Share This Page