January 09, 2008 | Ronda Jambe

Hey dude, who moved my super?

Like many Australian approaching retirement age, I have started to move other assets into an industry super fund. The tax free lure dangles like the golden ring on a merry-go-round. The only hitch is that it really is a merry-go-round, and my ticket only gives me a limited number of rides. Like the old farmers hit by floods in northern NSW, or the Nigerians who have lost all in the riots, options for starting again tend to close in on all of us.
Do I dare take the still warm egg from the soft nest of super?
Having made the leap last August to put all my super into the ‘socially responsible category’, I have now seen it diminish in value these last six months. They keep explaining that the high growth means high risk, but as the most conservative (timid really) of investors, I foolishly thought socially responsible would mean low risk.
In any case, ALL the categories (even cash) for my super fund seem to have been negative this last little while. And while they may eventually recover, I am also aware that the whole sub-prime mess is now spreading to the banking sector. And by the time things bounce back, I may well have lost so much that the losses can’t easily be recovered. My ticket on the merry-go-round has a time limit, as actuaries know.
Several friends have their money with trusted financial advisors, and claim that they are now not paying tax and that their funds are increasing in value. But that makes me nervous too. Isn’t that what my big industry fund should be doing, saving my money and investing it so it grows? I’ve yet to meet a financial advisor I feel really confident about. At least you can see and try a used car, and assess the dealer accordingly. And what’s wrong with paying some tax? It’s like giving to charity and hoping they do something smart with it. Sort of.
So I’m taking another leap, counter-intuitive or perhaps just stupid: At the age of 60, instead of drawing down that glittering tax free allocated pension, I’m taking my money out of super and putting it into the only investment that I’ve done well out of. You guessed it: real estate.
It would be nice to branch out into something like commercial real estate, but I’ll probably just plod along with housing. Perhaps in a country town that is growning slowly, and where it is possible to get a 3000m2 block.
Being almost as concerned about food securityAdrienne Langman, the author of ‘Choosing Eden’, is just part of the story. The other part is that I enjoy designing places to live in, and learning how to do it more sustainably. My neighbors were so moved by her book that they are now rethinking their retirement. A small acreage in Tassie is looking good to them, with an extended family to move things along.
But back to the money markets and the hard yakka of protecting meagre assets acquired over several decades of working life. No one, regardless of their position on the wealth spectrum, wants to go backwards as they retreat from paid employment.
If the banks are marching towards greater securitisation, and money is going to become harder to come by, that must mean more expensive money. But how that will impact on housing at a time when immigration and internal population proceeds without check is another matter.
Could Australia experience a fall in house prices? If so, where and how hard? And how does one hedge the bet?
Any views more informed than mine (that’s just about all of you) are welcome.

Posted by Ronda Jambe at 12:34 pm | Comments (4) |
Filed under: Commerce


  1. Could Australia experience a fall in house prices? It certainly could and the most likely place for it to happen is in new housing estates on the far outskirts of the major cities, and in country towns.
    In the former case the trigger would be a slowing economy, stretched 95% borrowers defaulting on mortgages; in the latter case, continuation of the drought.
    Freeing up some capital by selling out of Brisbane and buying a property in Tassie isn’t a bad idea if you want to go and live there but still leaves the question as to what to do with the resulting cash.
    Getting out of superannuation at this point and getting into property runs the risk of selling out of one asset class at the bottom of the market and buying into the other at the top.
    Ethical investment funds are not designed to be low risk unless they say they are, and as the local authorities who invested in Grange Securities products have recently discovered, even those funds that are described as low risk sometimes aren’t.
    I am not a licensed investment advisor and this is not intended to be investment advice. Good luck, though.

    Comment by MikeM — January 10, 2008 @ 5:51 pm

  2. I would encourage you to shop around for a financial advisor. Initial meetings will often be at no cost, and you are likely to glean some useful info on strategies, etc even if you are ultimately unsuccessful.
    Super is NOT a type of investment – it is merely a tax structure. You can own property through super if you wish, and you will typically pay less tax than if you hold property personally. Recent changes also allow you to gear through super.
    Super offers some very generous tax concessions. However, even though withdrawals from most funds are now tax-free from age 60, super is only completely tax-free once you commence a pension. Until such time, the investment earnings in the fund (eg dividends, rent, etc) are taxed at 15%. So start a pension sooner rather than later, and reinvest the income if it is not required.
    On investing, many would say you should spread your eggs around.
    Good luck!

    Comment by david — January 10, 2008 @ 10:22 pm

  3. thanks for the comments, in the end it is a very personal decision, dependent on variables like risk tolerance.
    By the way, my property is in Canberra, not Brisbane. Canberra, with its high rents, is still good for investors.
    Small coastal towns that are attracting retirees and all the medical facilities and employment that go along with that are another possibility.

    Comment by Ronda Jambe — January 14, 2008 @ 12:17 pm

  4. juxd vjcxrikhq nraplimv plrcg enpfaxud mbdscik pfcg http://www.pecygqswi.yqoup.com

    Comment by uqbzfm njdsaumot — January 24, 2008 @ 10:12 am

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.