Author Topic: Help Please! Need to pick a fund TONIGHT  (Read 3376 times)

cbr shadow

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Help Please! Need to pick a fund TONIGHT
« on: July 17, 2014, 08:13:07 PM »
My wife is starting work in Australia (we're Americans) for a contract job for two years.  She has to pick a superannuation fund for her work.  She called tonight and said she just realized she needs to pick one today.  I'm lost!
Here in the states we (like lots of mustachians) invest in Vanguard low expense index funds (VTSAX, Vanguard target retirement 2050)
Which of these should we go with?

http://www.canstar.com.au/superannuation/compare-starter/

Any help is much appreciated!
-CBR

St4n

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #1 on: July 17, 2014, 08:58:16 PM »
I had this same problem about two years ago when I moved to Oz from the UK.  I went with my employers default provider (TAL) at the time, (I may be wrong, but I think all employers have a default provider), but the are incredibly expensive.  Anyway, since then, I've been doing some research and I'm going to roll my fund over to ING Living Super when I change jobs next month.

I like the look of the ING option because:

1) The have some good low-cost (by Australian standards) index funds.
2) You can buy ETFs (and ordinary shares) within the account, subject to certain fees (not unreasonable, by Australian standards).
3) They have a user-friendly website - see www.ingdirect.com.au/superannuation/living-super.html (although I can't comment on how well it works once the fund is set up).

Dodge

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #2 on: July 17, 2014, 09:06:43 PM »
ING DIRECT - Living Super looks pretty good to me too.  Cheapest option there, and it has Vanguard ETFs.

Primm

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #3 on: July 17, 2014, 09:07:53 PM »
I'm curious about your wife's work. The list of funds you linked to, a lot of them are industry specific (HESTA you can only be a member if you work in health care, TWU is for transport workers, REI is real estate, etc.). Is that a list provided by her employer?

My suggestion would be an industry, not-for-profit super fund with the option of allocations into 100% shares. Industry funds have lower fee structures in general. Most funds will allow you to change your allocation at least a couple of times a year without any penalties.

St4n

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #4 on: July 17, 2014, 09:42:11 PM »
Hi Primm,

Several sources I've come across have suggested that industry funds can be cheaper option, but I'm reluctant to go down that line for several reasons:

1) The investment choice generally seems limited.  With many industry funds you can choose general options such as "balanced" or "growth", but nothing more specific than that.
2) I'm suspicious of organisations claiming to be not-for-profit.  It's almost impossible to align fees and charges so precisely that no profit is made.  Even if the company administering the fund is not for profit, the investment company is most likely collecting a fee, which brings me on to my next point...
3)  The fees and charges are opaque.  Think of it like your everyday bank account - you don't get to see what interest the bank is making on your money, but you know that they earn several percentage points more in interest than they pay you!

For reference, my better half was a nurse (she's now a SAHM) and is in HESTA at this point in time.  We intend to roll her fund over to ING around the same time and mine.

Primm

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #5 on: July 17, 2014, 09:46:04 PM »
So am I! I have two funds going atm, one with my current employer and a previous one with HESTA. I've been more than happy with the returns, fees and ease of dealing with HESTA, which is probably why I haven't rolled it over yet - if I leave my current employment (not in nursing) I'll be able to keep the HESTA fund. Getting back in if I didn't stay in health care would be difficult.

Was having a look at the ING one and I love that it has the option of basically self-managing without being an SMSF. I'd probably pick that too.

philby85

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #6 on: July 17, 2014, 10:02:41 PM »
Firstly, don't stress too much. If you change your mind later, it is really easy to change funds.

I use sunsuper. It has low fees and decent returns. You can also log in on their website and change how the money is invested. They have a good array of investment strategies for you to choose from. I've also heard that employers like sunsuper because it is really easy for them to deposit money into employees accounts.

cbr shadow

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #7 on: July 17, 2014, 10:16:09 PM »
Thanks for the information everyone.  It's good to know that it isn't REALLY urgent like it first felt!

potm

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #8 on: July 17, 2014, 11:16:48 PM »
Since you're wife is only starting to work here, I assume she'll be accumulating super from scratch.
In that case the Ing living super option is very good because it doesn't have a flat fixed admin fee like a lot of others.
It's default fee free option has no management fee at all but requires half your money in cash which gets a low return.

The other investment options have a fee of .75% which is pretty standard for Australian super funds.
There's a direct investment option which you can buy ETFs as other's have mentioned but I wouldn't recommend those with small amounts as the fees make it prohibative. There's a yearly fee to use the direct investment option and also brokerage costs.

My recommendation would be start with ING and then when the balance grows to a decent amount, switch over to Sun Super or Australian Super and look into their index options which have much lower fees than any of the actively managed options.

cashball

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Re: Help Please! Need to pick a fund TONIGHT
« Reply #9 on: July 18, 2014, 01:58:16 AM »
I went with my employers default provider (TAL) at the time, (I may be wrong, but I think all employers have a default provider), but the are incredibly expensive.

That they are. I've been self-employed for the last seven years and have totally ignored the tiny balance I had in my account there. Despite their best efforts it has grown by like $200 in the last few years.

I'm in the process of opening a new account with Plum, since the investment selection is basically a catalogue of MLC and Vanguard index funds. I'm not actually required to contribute a cent to super but I've recently decided to take it seriously and start putting a token amount in at least so the life insurance is active.

For OP:
Firstly, don't stress too much. If you change your mind later, it is really easy to change funds.
Heed this. It's very easy to open a new account with whoever you want and transfer any existing balances into it. Some will charge exit fees though so read the fine print.