Robin Bowerman, Head of Retail at Vanguard Investments, shares investment and personal finance insights gained from two decades in the finance industry as writer, commentator and editor.
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| Testing times |
21 August 2008
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Many members of large super funds become less patient with their funds' administrative practices during bear markets - and not solely in regard to returns.
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| New SMSF trustees - a matter of knowledge |
20 August 2008
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The Australian Taxation Office still has plenty of concerns about the level of superannuation knowledge among new SMSF trustees - and with good reason.
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| Pride, predictions and a falling dollar |
15 August 2008
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While Olympic athletes have done their bit for national pride this week our currency is proving a fickle friend to investors. The Australian dollar is down 11% from its peak at $US0.98 in July 2008.
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| Taxman looks to super |
14 August 2008
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The Australian Taxation Office released this week its compliance program for 2008-09, giving a detailed insight into where tax officers will pay particular attention over the next 12 months. It is well worth a close look.
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| Looking back |
13 August 2008
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When sharemarkets experience a bear market, it is a valuable exercise to look back at how markets have recovered from past bear markets.
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| Tax insights point to a simpler way |
8 August 2008
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Taxes and death are often given equal billing in terms of certainty and popularity but when it comes to complexity our tax system seems to be a clear winner.
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| Reaching the self-employed |
7 August 2008
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How do super funds attract the self-employed into the super system? The finding of an effective answer to this straightforward question should be highly rewarding for both the super funds and for the many self-employed with little or no super.
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| Grey power |
5 August 2008
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The rapid ageing of Australia's population together with increasing longevity and growth of super savings are making retired super fund members a truly powerful force.
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| Super returns to shape a generation |
1 August 2008
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The super fund returns for the last financial year may well prove to be a defining moment for a generation of investors.
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| Super realism with projected end-benefits |
31 July 2008
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Sometimes saving for retirement may seem a little like feeling your way in the dark. You probably know your existing super fund balance but may have no immediate impression of the likely balance by the time of retirement - if you continue your current contribution pattern.
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| Out on the table |
29 July 2008
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Well, the negative super fund returns for 2007-08 are finally out on the table and are somewhat worse than had been widely expected a few months ago.
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| Tuning into your super fund's risk |
25 July 2008
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Know thyself is one of the unwritten commandments of investments.This year's superannuation statements could prompt an outbreak of self-awareness that is unprecedented in the history of our compulsory super system.
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| Dirty tricks |
23 July 2008
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Every year, many thousands of Australians try to come to terms with a surprisingly common financial setback - the loss of money through personal fraud.
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| Super fund choice: No fizzer |
21 July 2008
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A recent newspaper report labeled super fund choice as a "fizzer" because relatively few members are switching funds and because the cost to employers is surprisingly high.
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| Boom to bust: are we there yet? |
18 July 2008
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Post-mortems by their nature are sombre affairs. But it would perhaps be comforting to investors if a formal post-mortem into the great credit crunch of 2007-08 was underway because that would at least signal the worst was behind us and we could begin to learn from past mistakes in order to (hopefully) not repeat them again.
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| A horror year but... |
18 July 2008
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Fund manager performance figures released by Mercer this week truly underline how 2007-08 was a horror a year for most share investors. All but one of the 123 Australian share managers surveyed by Mercer produced a negative return.
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| Great debt cutback |
15 July 2008
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Australia is experiencing a debt cutback - at last! The Australian Bureau of Statistics released figures yesterday showing that housing, personal, commercial and leasing finance debts grew at the weakest rate for more than 16 years during the 12 months to May.
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| Tough markets test the value of advice |
11 July 2008
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Financial planners are going to earn their money this month. Super fund statements showing the first negative returns for many years will do that. For some advisers this will be a testing time - because like their clients it will be the first bear market experience they have had to work through. For others it will be a case of reminding investors where they are on their financial planning journey and that storms every five to seven years are to be expected.
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| Staggering mistakes |
10 July 2008
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It seems that thousands of superannuation millionaires could be licking their wounds after overshooting the transitional $1 million cap that applied to non-concessional super contributions made between May 12, 2006 and June 30, 2007 in the lead-up to the arrival of the new super system.
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| Skiing in Switzerland and SMSFs |
8 July 2008
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I have long thought that required reading for new SMSF trustees should be a summary of the decision in the "Swiss Chalet Case", given by the Administrative Appeals Tribunal some 13 years ago. The case provides an excellent illustration of what the centrepiece of superannuation - the sole purpose test - is all about.
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| SMSFs: fashionable performers |
4 July 2008
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Self-managed super funds are the new black of investing.It is almost fashionably required for any high net worth individual to have their own SMSF and they are becoming a major holder of superannuation assets.
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| Shabby treatment |
3 July 2008
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Why have the self-employed been treated so shabbily when it comes to super? As I wrote in a recent Smart Investing, new research by the Association of Superannuation Funds of Australia (ASFA) found that 28% of the self-employed have little or no super. And a further 53% have less than $40,000 in super.
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| Another reason to look beyond today's market |
1 July 2008
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As even the last day of the financial year ends negatively for shares, here's just one of the many reasons why you shouldn't let yourself become distracted by short-term markets movements: life expectancy. The Australian Government Actuary reports that the life expectancy of a 50-year-old Australian female is 34.5 years and that a 50-year male has a life expectancy of 30.4 years.
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| When a love affair goes sour |
27 June 2008
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The love affair that Australians have enjoyed with property investing is turning into a horror story in other parts of the world.
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| Too clever by half |
26 June 2008
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The tax office in recent years has issued Taxpayer Alerts as early warnings of "significant new and emerging higher risk tax-planning issues" that tax officers are keeping a close watch on. The alerts can make fascinating and useful reading.
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| Alert for new SMSF trustees |
24 June 2008
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Trustees of new self-managed funds beware: the tax office is intensifying its focus on your activities.
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| Playing defence: can it work in tough markets? |
20 June 2008
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Smart sports people know there is a time to be aggressive and a time to play defensively. So why shouldn't investors be able to switch game plans depending on how the sharemarket is going Investing is full of strategies that try to benefit from performance patterns or signals that either suggest it is the time to buy or a time to sell.
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| The new age |
19 June 2008
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The US finance magazine Forbes recently published a feature on home renovations for the elderly, reflecting the growing power of the retiree market. Journalist Ashlea Ebeling reports on renovations to the home of Dan McConaughey, 79, a semi-retired lawyer, and his spouse, Mary Emma, 73.
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| Be prepared |
17 June 2008
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Most super fund members invested in their funds' balanced or growth investment options - that's more than 80% of fund members - would be expecting a negative return for 2007-08. Unlike when most balanced options last experienced a negative return (for 2001-02 followed by a very small positive return for 2002-03), the majority of members are well informed throughout a financial year about how their fund returns are progressing.
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| Today's petrol prices a test for tomorrow's retirees |
13 June 2008
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ATMs have become common sights inside petrol stations but if the cost of petrol keeps rising perhaps banks may consider locating some of their personal loan people next to the cash registers. On second thoughts perhaps we should keep the banking types away from the financing of petrol in case we unwittingly set up the next credit or loan crisis. If we are not careful we could end up with sub-prime petrol loans - you can just imagine the financial engineers structuring petroloans for people with no car, no driver's licence and no income.
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| Out in the cold |
11 June 2008
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Many of the self-employed are out in the cold when it comes to super savings. Although the self-employed make up more than 10% of the paid workforce, 28% of them have little or no super, according to a report, The Self-employed and Saving for Retirement, released yesterday by the Association of Superannuation Funds of Australia (ASFA).
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| Super and death |
10 June 2008
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What happens to our super savings and super insurance benefits upon our death? This is a fundamental question that financial planners and superannuation specialists could answer in an instant. But despite the big dollars potentially involved, there seems to be quite a bit of uncertainty in the community about the fate of these benefits.
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| Margin lending health check overdue |
6 June 2008
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Margin loans are to the investment industry what power tools are to the tradesperson - useful for getting the job done faster but dangerous in unskilled hands.
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| New face for retirement and tax planning |
5 June 2008
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As another financial year draws towards a close, it is worth reflecting on how much superannuation is shaking up not just retirement savings but also tax planning.
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| Don't fool yourself |
3 June 2008
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When share markets have fallen and inflation has risen, many more investors will pay much closer attention to their actual investment returns - after allowing for inflation, investment management fees, and taxes.
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| June - a tempting month for tax |
30 May 2008
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It is the time of year when the tax wheel of temptation gets a healthy spin. No-one likes paying tax and it is perfectly reasonable to arrange your affairs in order to minimise tax bills. The danger is that at times cutting tax bills becomes almost an obsession and people fail to look beyond the bright lights of today's tax deduction to understand the long-term value of the underlying investment they are sinking hard-earned dollars into.
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| What higher inflation means for investors |
29 May 2008
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It is somewhat ironic that we understandably sigh whenever the Reserve Bank raises official interest rates in an attempt to bring inflation back into line.
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| A powerful combination |
27 May 2008
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The historic out-performance of the share market, the low-taxing superannuation environment plus the benefits of the dividend imputation system is a truly powerful combination.
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| Ideas that have stood the test of time |
23 May 2008
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Original thought is a valuable thing. An original idea that has stood the test of time over 30 years in a fast-changing investment world is both rare and valuable.
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| Much overlooked |
22 May 2008
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Many taxpayers getting their boxes of receipts into some order in preparation to file their 2007-08 returns will get a resounding reminder what a significant year from a tax and superannuation perspective is nearing its final five weeks.
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| Bad habits |
20 May 2008
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How much do you spend at the petrol pump each month? What do you spend on eating out each month? Such questions could roll on and on and - if you are like most of us - you would probably only guess at the answers. But the failure to keep a close watch on your spending over the short and long-term is truly a bad habit and that could cost you dearly.
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| Making the tax cuts last |
16 May 2008
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The Government has delivered on its promise of tax cuts. But for average families will an extra $20 a week really make much difference or will it simply disappear into the household grocery or petrol bills?
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| A little super peace |
15 May 2008
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Thank goodness that superannuation has been left almost untouched in this week's federal budget. After the monumental revamping of the super system from July 2007 - spearheaded by tax-free super lump sums and pensions for those over 60, plus simpler pensions - it is time to catch a little breath.
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| New simpler super: not necessarily so simple |
13 May 2008
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Certainly, the super system has become much simpler since its revamping from last July but plenty of complications remain in super - particularly when trying to apply the rules to the particular circumstances of fund members.
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| Why cash is king for a day |
9 May 2008
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One of the natural reactions to periods of strong sharemarket volatility is for investors to rush for the security of cash. "Cash is king" is the cry that goes out through the broking community when individual share prices seem to be in a state of free fall.
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| The big switch |
8 May 2008
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With home loan interest rates at a 12-year high, many thousands of homebuyers must be thinking about trying to switch to a lower-interest loan. Potential switchers would include those reaching the end of fixed-rate loan periods and having to face the harsh reality of prevailing rates.
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| A Rip Van Winkle hypothetical |
5 May 2008
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An editorial in The Economist magazine (May 1) puts forward a Rip Van Winkle hypothetical as sentiment in the financial markets seems more positive at this stage.
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| Inside Buffett's investor master class |
2 May 2008
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Warren Buffett is a multi-billionaire with a powerfully simple way with words. He is also notoriously selective about giving media interviews - largely one suspects because he doesn't have to talk to anyone he doesn't want to. But there are a couple of events a year where Buffett is happy, even expansive in offering his thoughts on investing and the general state of business.
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| Age of vulnerability |
30 April 2008
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Many more Australians will soon have unrestricted control of large amounts of money. Such sizeable amounts would have seemed like lottery wins to earlier generations.
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| How is your financial literacy? |
29 April 2008
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If your answer to this question is resoundingly positive, you are among a special group. It seems that many consumers have little or no idea about investments and the principles of sound investment practice.
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| A good time to invest? |
24 April 2008
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What a sobering effect a year can have. This time last year we were in the full flush of a long-running bull market and a new superannuation regime was coming into play with the main focus for investors being how to get up to $1 million into super before the contribution window closed forever. Markets since then have reminded us of two important lessons.
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| 'White-anted by debt' |
23 April 2008
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Personal debt and superannuation seem strange bedfellows. But unfortunately the two are indelibly linked. Savings expert Dr Vince FitzGerald is quoted in the cover story of the latest Superfunds magazine as saying: The value of superannuation is being "white-anted by debt".
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| Self-managed super: treat with caution |
21 April 2008
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Whenever investment markets experience a difficult time, there tends to be an increase in the number of self-managed super funds being established.The reasoning is that many people faced with negative returns from their large super funds think they can do a better job themselves with a SMSF.
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| The power of a personal wealth benchmark |
18 April 2008
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Investors often have a love-hate relationship with benchmarks. They love it when the nightly TV finance report tells them the benchmark index has gone up and hate it when it loses value. But benchmarks can be powerful sources of information for investors, advisers and fund managers that go beyond simple performance measurement.
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| Liposuction for your personal debts |
17 April 2008
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Many borrowers who consolidate their credit-card and other personal debts could be tricking themselves into believing that their runaway loans are being brought under control.
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| The true costs of excessive debt |
15 April 2008
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One of the worst consequences of high personal and consumer debt is that it can throw you off your intended long-term course if interest rates sharply rise or investment markets behave in a way that you don't expect.
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| Low returns hit home for super |
11 April 2008
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Expect to hear bad news about super funds in the next few months. Negative returns for six months will do that. But poor returns does not mean super is a poor system.
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| Employee shares: watch for potential risks |
10 April 2008
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Many employees would have an unhealthy attachment to shares in their employer's company. Most employees are, to say the very least, familiar with their employer's goods or services. And many would feel some degree of comfort in owning shares in the employer's business if listed on stock market.
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| Here's to the ordinary |
7 April 2008
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Is reliance on the "default" portfolio in a large super fund taking the easy way out My short answer is a resounding: No! Reliance on the default portfolio or something similar is no cop out.
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| Days of our investing lives |
4 April 2008
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There is only so much excitement that an investor needs in their life.Daily drama is better left to the world of TV soaps than your portfolio.But sharemarket investors around the globe have had to deal with big daily moves - up as well as down - since August last year.
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| In perspective |
2 April 2008
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Few super fund members probably would have been taken by surprise when Minister for Superannuation Nick Sherry said in the past week: "Even though there's three months left to the end of the financial year, I'm advised by most funds that it's highly likely that we will see the most widespread negative rates of return than we've seen before."
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| Hot super strategies |
31 March 2008
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Without doubt, two of today's most-popular super strategies are the taking of a transition-to-retirement pension by members over 55 and the borrowing to invest by SMSFs using instalment warrants or a similar means.
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| Good times to return, date to be advised |
28 March 2008
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The Governor of the Reserve Bank, Glenn Stevens, is not into market timing. This might seem at odds with his role as the country's most influential banker that requires decisions based on forecasts of future economic activity.
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| Eyes wide open or half shut |
27 March 2008
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The Government has raised its concerns that some self managed super fund (SMSF) trustees may not be as aware of their responsibilities and obligations as they should be.
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| Your tolerance to risk |
27 March 2008
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The recent intense volatility in the share market together with falling share prices would have tested the tolerance to risk of most investors.
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| A focus on income |
25 March 2008
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When share prices are experiencing times of intense volatility, an interesting and valuable exercise is to closely examine the consistency of the income produced from your share portfolio. It is a useful physiological and investment tool at times like these.
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| Keep it simple to ride out market emotions |
20 March 2008
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There is one clear lesson investors can learn from the recent sharemarket turmoil - the smart way to invest is to keep things simple. Overconfidence is a real trap that investors can unwittingly fall into for no other reason than as human beings we are wired to behave that way.
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| A telling question |
19 March 2008
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"How can we position ourselves to survive and prosper from these turbulent times?". This telling question is asked by columnist Eric Dash in a recent personal-finance feature in The New York Times.
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| Reality strikes |
17 March 2008
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Falling share prices in recent months would have convinced many investors to examine the adequacy of their retirement savings. Reality has truly struck.
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| SMSFs urged to watch the fees |
14 March 2008
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Self-managed super funds have been the big growth story within a fast growing industry for the past three years.With more than $300 billion in SMSFs they are on their way to being more than 30% of the total super market. That has got plenty of attention both within the industry and the various regulatory regimes charged with maintaining the integrity of our super system.
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| SMSF trustees with 'learner plates' |
13 March 2008
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The Government and the tax office, in its role as regulator of Australia's 370,000-plus self-managed super funds, clearly have grave concerns that many new SMSF trustees lack the most basic understanding of their legal obligations. There are solid grounds for their anxiety.
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| Compare apples with apples |
11 February 2008
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Whenever the share market sharply falls, many investors make the mistake of comparing their funds' return with the prevailing cash rate. Cash, however, is in no way a useful yardstick for a super fund with a typically diversified portfolio.
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| When retirement plans are derailed by markets |
7 March 2008
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Baby boomers, it is often said, will redefine what the word retirement means. The reality is that people in the baby boomer demographic bulge have little choice but to redefine retirement.
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| The ages of debt |
5 March 2008
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The latest rise in official interest rates - the 12th in the current rate cycle - will strike hardest homeowners age 35-44.
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| SMSFs Fundamental noncompliance |
4 March 2008
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Trustees of self-managed super funds (SMSFs) who fail to comply with even the most fundamental provisions in superannuation law face paying a high price.
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| The certainty of high fees - lower returns |
29 February 2008
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It is annoying when you buy something only to find out later it did not deliver on the performance promise. That is what a lot of the world's best investors have done in the past five years according to one of the major asset consulting firms Watson Wyatt.
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| Look to the long-term |
27 February 2008
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The returns of the big super funds to January 31 should serve as yet another resounding reminder to always concentrate on the long-term without being distracted by short-term market movements.
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| Keep it simple |
25 February 2008
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What advice does the longtime chief investment officer of the $22-billion-plus Yale Endowment fund have for the individual investor?
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| Tax rubs salt into market wounds |
22 February 2008
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Losing money is bad. Losing money and then getting slugged with a tax bill sounds like a sick joke. But that is the prospect many investors in some of Australia's leading share funds face come tax time.
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| The home-loan stretch |
21 February 2008
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Successive interest-rate hikes may tempt some homebuyers to stretch their mortgage repayments over a longer period if possible in order to reduce the minimum amount that must be repaid each month. But watch out.
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| Face the reality of super savings |
19 February 2008
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The Association of Superannuation Funds of Australia (ASFA) has produced some fascinating figures that starkly illustrate why Australians should not rely on superannuation guarantee (SG) contributions to provide what many people would consider an adequate standard of living in retirement.
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| Time to rein in the debt drivers |
15 February 2008
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Where there is debt there is risk. That much ought to be clear given the recent sharemarket gyrations and subsequent record number of margin calls made to borrowers to top up their accounts.
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| The case for salary-sacrificed super |
14 February 2008
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Most Australians have little chance of having enough super savings to maintain their current standard of living in retirement unless they make regular voluntary contributions over a long period. This is resoundingly clear from Retirement Savings Update, released this month by the Association of Superannuation Funds of Australia (ASFA).
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| The home-loan cushion |
11 February 2008
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The lifting of official interest rates by the Reserve Bank last week to the highest level in 11 years should serve as a reminder for borrowers to always adopt strategies to lessen the impact of future rate rises.
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| The market's new order: get back to basics |
8 February 2008
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Through the clamour of companies reporting mid-year results and sharp market swings one comment this week was like a clarion call: it was time to get back to basics.
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| A no-frills guide to super |
6 February 2008
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The Australian Securities & Investments Commission (ASIC) has definitely made a smart move this week by publishing, Super Decisions, an easy-to-read basic guide to super. Knowledge about super among some super members is still sadly lacking.
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| No easy ride |
4 February 2008
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Many investors who had borrowed heavily using margin loans to invest in a small number of stocks may have reached the opinion until late that this was almost an easy ride to wealth.
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| Super steers around market timing dilemma |
1 February 2008
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Investors are living in interesting times - to misuse an old Chinese curse - and as we rule off the books for January it is tempting to hand out bravery awards for investors who have had the discipline or courage to continue investing.
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| Puzzling issues |
31 January 2008
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Two fundamental superannuation issues that must confound many thousands of fund members are highlighted in the 2008-09 pre-budget submission by the Association of Superannuation Funds of Australia (ASFA).
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| The great super giveaway |
31 January 2008
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The tax office actually hands back a big chunk of the tax collected from super through Government co-contributions. This underlines just how many smart fund members are taking advantage of this opportunity.
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| Two investors one market shock |
25 January 2008
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Value like beauty is in the eye of the beholder. Let us consider two quite different investor perspectives on this week's sharemarket turmoil.
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| Take a long-term perspective |
23 January 2008
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Investors should try to look beyond this week's headlines that record the Australian market on Tuesday recording the largest daily fall for many years and reexamine their strong returns of recent years.
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| Market update |
23 January 2008
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The falls across global stockmarkets means investors are dealing with a barrage of financial data and emotional messages the likes of which we have not seen for more than a decade.
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| Much at stake for SMSFs |
21 January 2008
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SMSF trustees have much at stake. The self-managed-fund sector has total assets of $300 billion with each fund having investments worth an average of more than $800,000 according to the latest figures released by the Australian Prudential Regulation Authority (APRA).
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| SMSFs and residential property |
18 January 2008
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Why is your SMSF permitted under superannuation law to acquire business real estate from fund members but not residential property? This is a question that many members must ask themselves.
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| A life and death issue |
14 January 2008
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One of the most controversial issues arising from the new super system that keeps arising is the taxation of super savings upon a fund members death.
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| Away from the heat |
10 January 2008
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When the share market becomes particularly volatile, a smart strategy is to stand away from the daily heat.
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| Next hot investment idea |
8 January 2008
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A recent article by Scott Patterson in the personal investment section of The Wall Street Journal names what he regards as the next hot idea: keeping it simple.
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| Why today's winners are tomorrow's losers |
4 May 2007
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You can almost hear investors around the world grinding their teeth. They have decided to invest picked last years top performing fund only to see it plumb the depths of the performance tables for the next year or two.
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