How Much Are MySuper Accounts Likely To Change The Superannuation Landscape?

As at March 2014 there were an estimated 120 lower cost MySuper products available.  Chant West recently released a paper on their MySuper research which is able to be accessed via the following link:

With a clear emphasis on lower fees and investment costs you could expect there will be significant interest in these MySuper products in the future.

Over time, the MySuper arrangements could force the larger institutions to lower their existing superannuation account fees but it may take a very long time.  Don’t expect the banks to come running out to tell you to switch so in the mean time you should shop around and find most cost effective investment and advice solutions for your needs.

Need to know more, contact us!


Is It True That When It Comes To Financial Planning Advice, Most People Don’t Know Who To Trust Or Where To Start?

The following guide titled “Financial Advice and You” from the Australian Securities and Investment Commission (ASIC) is an excellent place to start.

Sadly, it has been my experience that most people seek the assistance of a Financial Planner far too late in their working life.  Don’t let this happen to you!

It has also been my experience that many people make little mistakes on a regular basis and over time this erodes their financial position.

It is a brilliant idea to ask questions early and/or seek a second opinion.

Ask Your Financial Adviser How Your Superannuation Fund Returns Compare Against The Average?

Chant West recently released their analysis of Superannuation Fund performance to 30 June 2014 and it can be viewed in their press release which is available via the following link:

I found the Chant West analysis interesting when the results from active management are compared to the returns achieved by simply investing in the index.

For the period ending 30 June 2014, a Balanced Fund (30% cash/70% growth assets) taking an index approach returned ~14.8% over 12 months and ~7.8% p.a. over 10 years (in both cases returns are before fees but if investing through a low cost investment structure the total investment costs should be no more than ~0.4% p.a.).  The Chant West analysis suggests the median 12 month and 10 year super fund returns (after fees but before administration costs) were only 12.8% p.a. and 6.9% p.a. respectively.

When you compare the index fund returns to those quoted in Chant West’s analysis of the best performing super funds and median super fund returns to 30 June 2014, the index fund returns are impressive.

Investing passively using low cost index fund options continue to present an attractive and very cost effective investment alternative for many investors and the effort required to manage those investments might be a lot lower.  At the end of the day asset allocation is more important than active fund manager selection, as many active fund managers underperform the index over the longer term.

At The Financial Advice Shop we maintain it is very difficult to outperform the index over the long term so always consider the costs of active investment fund managers before getting too excited about the possibility of hyped up short term investment returns.

Did you Know The Government Will Snatch Your Bank Account If It Sits Idle For Three Years?

In December 2012, Commonwealth laws that govern unclaimed money were amended by the Treasury Legislation Amendment (Unclaimed Money and Other Measures) Act 2012.

ASIC holds money from bank, credit union and building society accounts that have not been used in 3 years and contain a balance of $500 or more (interest deposits do not count as transactions).  To find out more visit:

According to ASIC they currently hold around $1 Billion in unclaimed monies from inactive bank accounts, shares and insurance proceeds so visit their website to check if any of it belongs to you.

Ask Your Financial Adviser To Help You Find Your Lost Super!!!

Did you know that the Australian Tax Office is currently holding about $14 Billion dollars in lost super money.  That’s unbelievable and it’s 14,000,000,000 good reasons to take an interest in checking if any of that lost super  money is yours!!

Fortunately it is easy to check for free if the Australian Tax Office is holding any of your lost super money.  Visit our website and click on the bright red button titled “Find Your Lost Super!!” and follow the instructions.

If you know someone else who might be interested in this issue then please let them know.

It is always a great feeling when you find some money you did not know you had!!


Are Historically Low Interest Rates Distorting The Australian Property Market?

The report I mentioned last week by RP Data, that indicated property prices for Australian Capital Cities have continued to rise, was great news for homeowners and bad news for those trying desperately to buy a home.

With official interest rates in Australia at around 60 year lows of 2.5%, there is plenty of money being poured into property in our capital cities. There is also plenty of competition amongst lenders with the big players recently cutting some of their fixed rate loan offerings in anticipation of low interest rates for perhaps longer than some expect.

We should also remember that there is a housing shortage in Australia so this is also a possible factor driving current property prices.

The Australian economy still needs to show evidence that after a really tough May 2014 Budget it can still transition from a mining led economy that was in overdrive a few years ago. Until this is achieved we may not see interest rates move higher.

If the Australian economy falters and the Australian dollar remains high, or we have a global economy that falters in some way, a further interest rate cut in Australia could not be ruled out. In the long term this could prove to be a very bad scenario.

While Australian unemployment rates remain low and interest rates remain extremely low, property prices could go even higher if demand continues. Eventually the current boom cycle will end and when it does it may end badly with personal hardship from forced property sales and a falling property market.

It is important to remember that there is a property cycle with points in time where property is undervalued and overvalued. If property purchasers get in at the wrong time or pay too much, it can take up to 10 years or longer for things to sort themselves out so always do your own research.