Author Topic: Australia SMSF Super Allocation  (Read 1970 times)

LittleAussieBattler

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Australia SMSF Super Allocation
« on: September 14, 2014, 12:54:55 AM »
I'm interested in whether other Aussie MMM readers use self managed super funds and if they do what type of allocation to they have in them, what was the balance when you started etc.

I've been mostly using ING and AusSuper SMSF lite options, but they are limited in the fact that you can't allocate more than 20% to a single ETF and some of your balance must remain in cash/other non controlled investments.

I have read quite a few articles suggesting that the minimum super balance to try an SMSF is about 200k otherwise the fees will be too great. However I recently noticed AusSuper has doubled their fees for the investment options I use as at June 30 this year.

Our details:

Me: AusSuper - SMSF Lite with 100k balance mixed with Vanguard and iShare ETF's. Unfortunately a lot of the ones I would like to use like VAP and VTS are not supported.
Wife: ING Direct - SMSF Lite with 150K in 10% Intl Bonds, 15% REIT, 30% Intl Shares, 55% domestic shares.

As I am keen to get to correct asset allocation and the fees I pay my account are only about $800 a year for personal and business and he will add in the SMSF as part of the price I am thinking it's a better deal.

Cheers

LAB.

superannuationfreak

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Re: Australia SMSF Super Allocation
« Reply #1 on: September 14, 2014, 04:58:55 AM »
Two thoughts on costs.

Firstly I find it hard to beat sun super with their index asset class funds without a very large balance.

Second if you do want to go with an SMSF then both you and your wife can have a single SMSF between you making it relatively cost-effective. That wouldn't stop you from both having asset allocations you wanted, just apportion things appropriately.

For asset allocation, start with your need, willingness and ability to take risk and use that to figure out a risky assets to fixed interest split. For the fixed interest see what rates and yields you can get with term deposits, cash and government bonds.

For the shares determine how much home bias will let you sleep at night. Some home bias is appropriate for at least taxation reasons. Most of the AUS equity I put into VAS but depending on your beliefs and preferences some old-school LICs like afic and argo, REIT index or even a small amount in small or mid caps may provide some diversification (I am largely indexed but not comfortable with the small ordinaries index as active funds have consistently outperformed it).

The best diversifiers (other than fixed interest) will be international shares like VTS and VEU. But you'll have to figure out how large an international allocation you can have while still sleeping at night.

deborah

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Re: Australia SMSF Super Allocation
« Reply #2 on: September 14, 2014, 05:13:58 AM »
Superanuationfreak, As BigChrisB mentioned in another thread, the ASX has a high international exposure (he put it at about 50% for his holdings, and I had already put it somewhat higher). Given this, do we really need additional international exposure in our holdings? Actually, I have been looking for some European exposure (yes, I know), because most of the international exposure we seem to have is US - so while most "international" is US, what I have isn't truely international.

LittleAussieBattler

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Re: Australia SMSF Super Allocation
« Reply #3 on: September 14, 2014, 05:37:32 AM »
Cheers Deborah and superannuationfreak (I've just digested your blog by the way :))

I already hold AFI and ARG, STW and one Berkshire A outside of super with the reasoning that I want to retire way before the super access age. Which I believe will be pushed out to somewhere near 70 by the time I get to it in 35 years.

So I guess I am doing two bits of planning, the structure I need outside of super for 35-65/70 and the structure for inside super post FIRE.

Outside of super when I was a single man I started an AMP Investment Bond with the 1% fees that acts like a wrap account. This was much cheaper than the 46.% tax bracket at the time as the tax is not declarable.

Now I have a low income wife who I can distribute dividends and franking to which I am planning on doing mostly in her name. After looking at trust options, as there is only two of us it doesn't seem worthwhile (looks like I need some dodgy extended family to milk the trust)

LAB


bigchrisb

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Re: Australia SMSF Super Allocation
« Reply #4 on: September 14, 2014, 07:24:47 PM »
Superanuationfreak, As BigChrisB mentioned in another thread, the ASX has a high international exposure (he put it at about 50% for his holdings, and I had already put it somewhat higher). Given this, do we really need additional international exposure in our holdings? Actually, I have been looking for some European exposure (yes, I know), because most of the international exposure we seem to have is US - so while most "international" is US, what I have isn't truely international.

That particular conversation was about currency hedging and international stocks.  Aus stocks do get a lot of earnings from overseas, which gets some diversification.  However, while there is some currency diversification, the ASX is really concentrated in sectors.  I buy overseas shares (I mostly use VEU, IVV and VTS) for the diversification by sector, i.e. to get a bit of money out of banks and miners!