For most Australians, picking individual stocks and maintaining stock market vigilance is not what they want to do. The good news is you need only stick with the structure most of you already have.
That is to say, leave your money tucked in one of the large superannuation retail or industry funds. There is nothing wrong with that.
The point of superannuation is to put money away for retirement, not to play the market.
Leaving your money in a fund means you’re not going to be gambling with it. Individuals being allowed access to their superannuation money is a very dangerous element of the superannuation legislation and rather goes against the principle of “putting money away” for retirement.
Losing your retirement funds under the camouflage of seemingly sophisticated yet wholly amateur investment is utterly irresponsible. So if you are not engaged, interested, passionate and skilled, do yourself a favour and leave it where it is. Here’s why:
Individuals cannot help but constantly pursue today’s rocket under a rock. Big funds don’t. Big funds are a heck of a lot less volatile and by definition, safer than allowing some rank amateur (you) manage your super.
There are better investments
Leaving investment up to somebody else leaves you free to do the one thing that you should all be doing, which is to invest in your career and/or business not in the markets. Investment in the markets is time-consuming. Investment in yourself is perpetual, stimulating, and low risk, the lowest-risk investment you can make.
Technology has moved on
Thanks to technology, most major super funds and industry funds now offer you the ability to do some mild stock market timing through the back end of their website. This is about as much market timing as anybody needs. Clicking between the “cash” or “aggressive” option and occasionally back to “cash” on your fund’s website is all you need to do. If you’re lucky you will only have to press cash once a decade.
The next question is which fund? They are much of a muchness at the big end. Whatever multi-billion dollar fund you are already in will probably do, as long as it is big and has good website functionality. The big funds are all vehicles to access the same average returns from all the markets (a balanced fund) or equities alone (an equities fund). That’s the major difference between funds. Any major super fund will be “balanced” and is absolutely fine. Whether it is an industry fund or not, your results will be very similar. While some industry funds look good because they are “not for profit”, they still take off their costs, which means you are still paying for their office rent, staff, water coolers and BMWs.
The downside of leaving your super in one of the major funds is that there is very little in the way of “active” management going on. In fact, laughably, they are now leaving the asset allocation, the management of which used to be the main value-add of a very large superannuation fund manager, up to you! In the end, the average super fund investor will be invested in thousands of equities and all the asset classes, and that dooms you to a very boring annual return that will be below the equity market in a good year and above it in a bad year. It will not grow rapidly, and it will not transform you financially. It will simply park the money somewhere you can’t touch it and where it will be at the whim of the financial market averages. That is a good thing most of the time because it means you aren’t gambling with it, losing it, or wasting any time managing it. Only occasionally will it be a bad idea. When a market crash comes along, or a global financial crisis, or any of those other so-called once-in-a-lifetime events that actually happen every 10 years. That’s when you need to open that website and hit “cash”.
When to hit “cash”
There is no scientific way to “call the market”. Perhaps the best way is to simply go by your guts. If you start getting worried about whatever is going on in the world or the markets, getting disturbed about headlines like “market has biggest drop in two years”, press “cash” in the back end of your superannuation fund’s website. It’s no big deal. You can always press “buy” again the next day. The main game is to try and avoid a seismic time-wasting market drop. They happen every decade or so and in 1987 it took 10 years to get back to the same level, and we are now 10 years after the GFC at the moment and have yet to recover the peak of 2007. Sometimes you simply have to sell the market or lose 10 years. So keep a weather eye on the headlines and read a bit more if they are talking about trouble in the stock market. If you’re lucky you may only need to make a decision once a decade.
Robert Kiyosaki not only knows about these ‘once in a lifetime’ events that happen every ten years – he knows what you need to do to soar above them.
Back by popular demand, Robert Kiyosaki, author of the #1 personal finance book of all time, returns to Australia with his team to give Aussies a crash course on the essentials for fast-tracking wealth in 2018.
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