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My SMSF – in control of my destiny

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Name: Peter

Occupation: Strategic policy, energy industry

Age: 63
Other members of your SMSF: My partner is a trustee. However, she has her superannuation in a government employee Defined Benefit Scheme. We recently considered moving her investment account into the SMSF, but decided to use that money to purchase additional years of service for her defined scheme.

How long have you had your SMSF?

I established the SMSF in June 2012. For about eight years prior to that, I had a financial advisor handling my superannuation, and before that I was in a mixture of government and private superannuation.

Why did you start it up?

I have always had an interest in finance and investing and my advisor was moving to another position about a year or so ago. That provided me with the impetus I needed to make the decision to do it myself. I also have a background in economics and finance.

How big is it?

Currently, it’s about $850,000. It was somewhat larger before the GFC, and I’m happy that I have, to date, been able to slowly build it up again. I often feel that, if I had control of my investments before, during and after the GFC, I would have taken a different tack to the one taken by my previous advisor. However, hindsight is a wonderful thing.

Is it more or less difficult to manage than you thought it would be?

I have been pleasantly surprised at the ease with which it all fell into place. It is definitely easier than I expected, despite the fact that I still work full-time. I actually don’t mind the occasional administrative tasks associated with it, and I certainly love the challenge of looking for new investments and re-balancing my portfolio on the odd occasion.

Are you glad you have it?

Yes, I like the idea of having control of my own destiny, and not having advisor or trailing commission fees to pay.

Are you pleased with its performance?

So far I am happy with the way it has gone. In the year to June 2013, I managed a return of about 23.5% (that includes contributions through salary sacrifice arrangements). I am cognisant of the fact, however, that the period was one of good overall returns across the board. That will not always be the case, and the next challenge for me is to learn how to hedge against market corrections, when or if they occur.

What is your asset allocation?

I currently hold Australian shares directly (51%), Australian shares through a managed fund (10%), international shares through a managed fund (7%), listed property through a managed fund (5%), Westpac Capital Notes (5%) and cash (11%). The remainder is held in the form of assets in an ATM investment scheme.

I hold almost 50% directly in financials, banks and insurance, which I may re-balance soon, as I think that is now overweight. The other half of the direct equities covers the top 20 “blue chips” such as Telstra, Woolworths, Wesfarmers, BHP, Rio, Woodside, CSL, CCL etc. I also reserve a small amount for small caps and a very tiny amount for ‘speculatives’, just for fun. The overall portfolio covers the range of sectors, including telcos, materials, energy and health. I am currently 90% in large companies and 10% in medium and small caps.

What are your favourite investments/stocks and why?

Definitely direct investment in Australian shares of good quality. My favourite stocks have been Telstra, Seek, Integrated Research and CSL. I have currently taken a risk and bought a small quantity of Billabong shares with the hope that this company will be successful again.

What investments do you have outside of superannuation?

My partner and I own our house. We also have two investment properties that we manage outside the SMSF, as well as a $100,000 ATM investment (separate from the one in the SMSF), financed by an investment loan. We also have about $25,000 in ANZ and Telstra shares held in trust for my partner’s daughter. My partner purchased those when her daughter was born.

Do you use an advisor or any kind of service provider?

I have no formal advisor, but I subscribe to the Switzer Super Report and three other subscriptions. I also keep up with market and international events by reading the financial sections of the newspapers every morning.

I selected E-Superfund as my SMSF platform to look after the taxation, financial and audit side of the SMSF requirements, and they handle that side very efficiently.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

Published on: Friday, September 06, 2013

The Switzer Super Report is a newsletter and website for self managed super funds. With exclusive commentary from Peter Switzer, Roger Montgomery, Paul Rickard and Charlie Aitken the Switzer Super Report will help you maximise your after tax investment returns and grow your DIY Super. Click here for a free trial or subscribe today.

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