Oh man. Why won't they leave this lot alone? I'm talking about SMSFs here. Again that furphy about SMSf's accessing advice. Myabe, just bloody maybe, the majority do not flipping want to access "professional" advice which is why they set up an SMSF in the first place. Set up an SMSF, take a conservative view and outsource to professionals such as AFI, ARG, MLT, CHO and so on with a smattering of index funds (iShares and STW types) plus a few banks, BHP, WPL, WES, RIO and the like so dividends come in at different stages plus a couple of rolling term deposits and cash at call for opportunity. Stay away from esoterics and structured products. So what is a "professional", who probably works for a bank and want's to charge 0.8% on assets they never selected, going to add?

For rogue SMSF's, well hammer them into extinction.

I've been reading bits and pieces on the Cooper review. My feelings about it are mixed.

The Government is opting for MySuper, a simplified low cost product as it has the view that the majority of Australians are apathetic about their superannuation. Opponents claim that it is a paternalistic approach and "dumbs down" financial literacy. Probably they are both correct but then me, being a tad cynical, thinks each side are talking their own book.

The Government from the point of view that low cost means more retirement funds and it is prepared to provide concessional tax rates now as this will be cheaper than the future cost of aged pensions from Consolidated Revenue.

The other side can see a source of revenue diminishing (Hell, you don't think the lease of the Ferrari F430 comes cheap do ya?)

I remember reading some time ago where an analysis of investors indicated that about 50% of them achieved average investment returns but of those surveyed about 80% or more considered that they were above average investors. Maybe that is the real problem. How or even if that can be resolved is the issue which could cause some sleepless nights in fiannce land.

I'd fail by the way as I have no idea what my Total Return on shares would be. I can imagine my discussion with a financial specialist.

FS:What is your TR? Me: I don't know. FS: What? How do you know how well your are doing or not? Me: I don't but why do I have to? FS: You need to know!! Me: but I'm happy as I am. FS looks for exit door from this horror.

The other aspect of the Cooper review which I found intriguing was the proposal to deny for SMSF's things such as art and esoterics of that ilk. I see that some in the art world claim that this would damage the art industry as the works could only be afforded via a SMSF structure. Riiiight. Something seems a bit wrong there. Do they mean that the art works cannot be purchased outside of an SMSF structure, ie with concessional taxation, because they are overpriced? Oh well, time will tell.

Judd you said

I'd fail by the way as I have no idea what my Total Return on shares would be

As far as I know the Investment strategy of a SMSF should include a benchmark to achieve a desired outcome and a minimum level of performance.
Something like "achieve a return of 3% above a market index/or 3% above rate of inflation"

Pedro

Pedro-Egoli wrote:Judd you said

I'd fail by the way as I have no idea what my Total Return on shares would be

As far as I know the Investment strategy of a SMSF should include a benchmark to achieve a desired outcome and a minimum level of performance.
Something like "achieve a return of 3% above a market index/or 3% above rate of inflation"

Pedro

As usual, you are correct Pedro. SMSF's are required to have an investment strategy and benchmark.

I should have clarified that I was referring to investments outside of superannuation. I find the whole investment thing very strange. An SMSF with $250,000 is subject to all these benchmarks, strategies, audit and accounting requirements.

Yet a person can hold four times or more outside of superannuation and the Government doesn't care about benchmarkts, etc. Neither does the ATO care. It just requires that income be reported in your tax return.

This lack of an overall coherent approach to investing whatever the structure used is really bizarre. Me very

The sole purpose test of Superannuation is that it is to provide benefits for retirement.

Because superannuation is tax advantaged, (max tax paid on contributions, max tax paid on earnings, achieve certain benchmarks, including age, it can be down to zero) the govt imposes certaain conditions such that the proverbial excesses and exploitations can't occur. Or so they try.

The govt has a few obligations, as well, as there is a mandated amount put in (SG - the 9% contribution for employees) and so they impose a set of conditions such that this is invested wisely, for the benefit of retirees in retirement. Or so they try

The govt has a vested interest in making Superannuation work, because it transfers responsibilty from them (Age pensions) to the superannuant (account based pensions). Or so they try.

I keep a sheet which I update whenever just to see how my SMSF is going and have attached a mock up which some may find useful.

Just a matter of using your figures in lieu of the mock up.

Important part is to have Total assets at end of previous year (Cell B12) to enable fund movement for YTD.

on the matter of returns

"Over the 110 years to the end of last year, 5.77 per cent a year of the total return of 7.4 per cent from Australian shares came from dividends, according to the Credit Suisse Global Investment Returns Sourcebook 2010. That's more than three-quarters of the total return and does not include the benefit of franking credits. Capital growth has been merely the icing on the cake of the wealth created through dividends."


or (from how-to-do-an-investment-strategy-for-smsf-3503.html )
Returns based on historical data, since 1971, regarding a "Balanced" portfolio
- returns have varied from -17% pa to +37% pa in any one year;
- at least one year of negative performance for every 10 years they remained invested; hence a 10% chance of a negative return each year;
- The long term return expectations for a "balanced" profile is 6.8% pa.

Pedro-Egoli wrote:I keep a sheet which I update whenever just to see how my SMSF is going and have attached a mock up which some may find useful.

Thank you for that Pedro. A neat piece of work.