Smart Investing
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The Chinese calendar says this is the year of the dragon. Less auspicious perhaps but for Australian investors this is shaping up as the year of fixed income.
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By taking a few simple steps, super fund members can both boost their retirement savings and legally minimise tax on their super – for themselves and their beneficiaries.
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Self-managed super funds seem set to remain by far the preferred superannuation choice among higher-balance members – particularly those in retirement.
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This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
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Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
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News & Commentary
Hey big spender 09 Mar 10
Successive ABS Retirement and Retirement Intentions reports show that more than a third of retirees who take superannuation lump sums use at least some of the money to pay off homes, upgrade homes or undertake home renovations.
It seems that some fund members wait until getting their super before installing a dream kitchen or bathroom.
With superannuation lump sums, many new retirees gain control over the biggest sum that they will ever have readily at their disposal. This is finally their money to invest or spend as they see fit.
However, a proportion of these retirees are particularly vulnerable to unwise investment strategies or the temptation to freely spend on more expensive housing, overseas holidays and new cars.
And others, of course, spend some of the money to pay off debt accumulated during their working lives.
It may seem surprising to many of us who recognise the challenge of trying to provide for a retirement that may last 25 years or so that almost 60% o Australian retirees over 45 have taken their super as a lump sum, according to the latest ABS Retirement and Retirement Intentions report. (The latest statistics were gathered during 2008-09 and released in December last year.)
It seems such a sensible personal finance strategy to try to pay off debt while still in the workforce.
Apart from taking advantage of the quality financial education offered by super funds and the like, it may be worthwhile gaining professional advice about personal debt control and the need to try to provide for a long retirement.
ASIC''s consumer website, FIDO, always has excellent budgeting and debt-control tips.
Your lump sum may not seem such a huge cash pile when you really think about how long it has to last.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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