I hope none of you had money invested in the Banksia Group. If so they have gone into receivership, your travels will be at an end.
They are mainly country Victoria based but also have branches in SA and NSW. A fairly small company.
The receivers have moved in, debts of $660 million I think they said, with no hope of any of the investors getting any back.
Feel sorry for them all.
barina said
04:52 PM Oct 26, 2012
I just heard on radio, a woman of 70 odd lost their life savings, over 60,000.......... damn criminal, she had been banking with them for over 20yrs. Just so sad for all who have lost their money. A few weeks ago people were shocked how many older folk stash their money at home or bury on the farm, I think I would be following them when I have to move my super out when I retire. Sadly not much seems to happen to the perople resposible as they lock their money up very tightly. I would NEVER trust anyone who said to me I will look after you and your money...like hell you will, is my response.
Happywanderer said
05:04 PM Oct 26, 2012
Same here Judy. A good reason to use the mattress. Reminds me of the Pyramid Financial Groups crash all those years ago. A lot of people I know from back then, some long gone, lost all their savings. The trouble with this one too is it is not govt protected, they said on the news.
barina said
05:29 PM Oct 26, 2012
Yes HW I remember Pyramid going also after being told by useless State gov at the time they were fine. Sadly people bank with these places as they offer higher interest, but therein comes the risk. Just terrible that it is peoples lives that are so affected.
bill12 said
07:17 PM Oct 26, 2012
I try to stay with the big banks, NAB, CBA,ETC, because your money is Govt guarenteed. I feel for these people.I hope they get something back.Bill
pauline said
06:05 AM Oct 27, 2012
I have always said............the good thing about having nothing is you have nothing to lose, but I do feel sorry for all those that have lost everything.
vk6tnc said
06:53 AM Oct 27, 2012
This is a direct copy from the Banksia Investment Website
5. Is the investment secure? Return of capital invested in the Fund is not guaranteed. However, each loan application is assessed with consideration of the lending policy, valuation report, loan-to-valuation ratio, serviceability, financial reports, credit history and other information deemed necessary to minimise risk. Your investment is secured by a registered first mortgage over real property in Australia.
If you put your money under the mattress, it won't earn a huge rate of interest, but it will be guaranteed if you don't tell anyone where it is
sandsmere said
02:19 PM Oct 27, 2012
To make it worse , they apparantely knew several months ago that they were in trouble but didn't report it .
The top brass should be jailed .
_wombat_ said
05:05 PM Oct 27, 2012
bill12 wrote:
I try to stay with the big banks, NAB, CBA,ETC, because your money is Govt guarenteed. I feel for these people.I hope they get something back.Bill
you can also have have gov guareneed with a credt union I would stay away from the big banks.
I also do not feel sorry for the people who lost money in this Banksia Group because they put their money in because it was a slighly higher interest, they thought they were getting a better deal but did not check out the fine print in most cases.
barina said
06:03 PM Oct 27, 2012
ASIC apparently new 18mths ago...they are as useless as !!!!..........
-- Edited by barina on Saturday 27th of October 2012 06:14:09 PM
Cupie said
10:20 PM Oct 27, 2012
How does the saying go ?
"The higher the return, the higher the risk"
Methinks we are all comfortable with higher risk when the market is on the up but are so ready to cry poor buggar me & blame others when the downside inevitably arrives.
I don't think that cash under the bed is the answer. I'll stay with the biggies with a moderate position.
Edit ..
I was thinking about my post & on reflection it may have appeared that I have no sympathy for those who have lost their hard earned. Just wanted to put the record straight. I emphathise with them (don't want to think about how much I lost on the GFC etc). I do feel heartfelt sorrow for them.
Perhaps many of us were good at our jobs & put away our little nest egg, but we were often not well equipped to enter into the complex dog eat dog world of investments & superannuation. We often placed (sometimes misplaced) our trust in so called Financial Advisers. In our case we were somewhat fortunate as we had a close and lasting family association with the CBA & took that path.
I sometimes wish (now-days) that I had taken the 'drip feed' Commonwealth Public Service Superannuation option that paid a lifetime indexed pension rather than taking the lump sum option. All things have their downside though. The 'drip feed' of 45-50% of your retirement salary, gives only 5/8 of that pension to a surviving partner & there is not a lump sum of cash available for trips & other capital expenditure. It's often taxable as income too & 100% taken into account for Centrelink purposes as well. In any case I had to make that decision many years before retirement & I was not equipped or inclined to make an informed choice.
ps. The last paragraph is based on my recollection of the CPS Superannuation conditions at the time of my retirement & may not be 100% accurate.
Hate to say it but it was Little Johnny Howards Govt in its last term when it almost doubled the allowances for assesable capital & income for pension purposes, that made my retirement as comfortable as it is.
-- Edited by Cupie on Sunday 28th of October 2012 12:16:21 PM
-- Edited by Cupie on Sunday 28th of October 2012 12:18:54 PM
woosy said
09:10 PM Oct 28, 2012
Yes i feel sorry for the people that have lost their life savings that they
have worked so hard for.... but you can bet not a thing will be done about it
hope they get something back I know that they have gone for the higher
interest but human nature is what it is
_wombat_ said
09:22 PM Oct 28, 2012
woosy wrote:
Yes i feel sorry for the people that have lost their life savings that they
have worked so hard for.... but you can bet not a thing will be done about it
hope they get something back I know that they have gone for the higher
interest but human nature is what it is
yes, human nature is what it is BUT as vk6tnc has pointed out clause 5 reads in part:
5. Is the investment secure? Return of capital invested in the Fund is not guaranteed.
They did work hard for their life savings BUT they did not look after it.
To put it simply they did not read the fine print.
barina said
07:55 PM Oct 29, 2012
Sorry to hear Ken......I had also heard that the interest rates were similar to the banks.....someone sure has some explaining to do that's for sure, bloody terrible to rip off the local folk who are always happy to support the local Joe.......
-- Edited by barina on Monday 29th of October 2012 08:06:25 PM
ken thomas said
10:16 PM Oct 29, 2012
The fine print may be there but thats what it is The directors and accountants and also the internal and external auditors have a lot to answer expecially since their accounts were signed off only weeks ago Its not like people were being greedy as the interest rate is not a lot higher than banks, the greed comes in when the financial people want more than a fair share of fees My holidays and travelling is on hold Ken
_wombat_ said
12:10 AM Oct 30, 2012
Ken, sorry to hear you maybe involved with this collaspe and I agree with you that the directors, accountants and auditors should be held responsible but as in all big business they will get away with what they have done, if you or I did the same we would be behind bars.
Happywanderer said
01:30 AM Oct 30, 2012
Hope it all works out for you and a lot of others in Echuca Ken. Could take a while but they have said everyone should get a reasonable amount back, what ever that means.
_wombat_ said
03:06 AM Oct 30, 2012
barina wrote:
I had also heard that the interest rates were similar to the banks.....someone sure has some explaining to do that's for sure, bloody terrible to prip off the local folk who are always happy to support the local Joe.......
the problem is that someone is maybe overseas by now.
barina said
03:16 AM Oct 30, 2012
_wombat_ wrote:
barina wrote:
I had also heard that the interest rates were similar to the banks.....someone sure has some explaining to do that's for sure, bloody terrible to prip off the local folk who are always happy to support the local Joe.......
the problem is that someone is maybe overseas by now.
Very true and they tie up the money in wifes name and family trusts. They should be able to be confiscated when they have been built with investors money. But ASIC is weak and therfefore nothing wil happen, The only crooks made to pay are when you rip off the Tax Man.........
ken thomas said
11:35 PM Oct 30, 2012
Another problem is that the Govt suggests if you are not happy with the big 4 go elsewhere, but they will not make sure they are covered ASSIC had been thru Banksia recently and by all accounts all was ok class action against them and auditors may be on the cards Ken
jimricho said
01:51 AM Oct 31, 2012
I too feel sympathy for anyone who loses their savings in an investment that they invested in in good faith.
There are three well-worn clichés when it comes to investing...
1. The greater the reward, the greater the risk.
2. If it seems too good to be true, it probably is.
3. Don't put all your eggs in one basket..... diversify your investments across asset classes and types of investments.
These "rules" have been around forever and are repeated "ad-nausea" but they still hold true. No one that follows these guidelines loses all their hard earned in one hit.
The bank deposit guarantee holds for all banks, not just the Big Four but no government anywhere can ever guarantee all investments. Doing so would create the "moral hazard" of being able to invest in anything, no matter how risky, in the knowledge that nanny government will bail them out.
ken thomas said
02:31 AM Oct 31, 2012
Hello Jimricho That may be true in most cases but with banksia the reward was not that much greater and has been a stable company for about 60 years and the interest was not to good to be true Putting all eggs in one basket may also be true but look at the GFC and super returns that are in different baskets and you still lose If we and employers have to put into super for retirement then it should be in Govt bonds or cash where you get a return and your capital is safe The world unfortunatelty is full of the get rich quick schemes but this was not one of them Ken
jules47 said
02:35 AM Oct 31, 2012
Sorry to hear your travelling etc is on hold Ken and Lyn - hopefully something will be rescued for the investors. A friend of mine took a large package from the semi govt job he had been at for probably 30 years. He took the advice of the financial advisor who was employed by the company, and managed to lose a huge sum in the first financial downturn, put it down to experience, continued on with the same financial advisor, and lost more in the last GFC -
The strangest thing is - he was an accountant, and very high up in the organisation he was employed by - go figure - if he couldn't get it right, how are us little folks supposed to manage.
_wombat_ said
02:53 AM Oct 31, 2012
a word of advice, I know its too late for some, but DO NOT EVER SEEK ADVICE FROM A FINANCIAL ADVISOR, they are only after getting a slice of your hard earned savings.
Go to centrelink and ask to see a financial adviser, it will cost you nothing and their advice is spot on, you do not need to be a pensioner to see a FIS anybdoy can request an appointment.
jimricho said
03:40 PM Oct 31, 2012
ken thomas wrote:
Hello Jimricho That may be true in most cases but with banksia the reward was not that much greater and has been a stable company for about 60 years and the interest was not to good to be true Putting all eggs in one basket may also be true but look at the GFC and super returns that are in different baskets and you still lose If we and employers have to put into super for retirement then it should be in Govt bonds or cash where you get a return and your capital is safe The world unfortunatelty is full of the get rich quick schemes but this was not one of them Ken
Super losses in the GFC were a result of losses in the underlying investments. In general these investments were diversified and as such the losses were spread and did not result in investors in these funds losing everything. These losses followed some very good gains in the years prior to the GFC. Unfortunately this didn't benefit those who hadn't been in a fund for very long.
Correct me if I'm wrong but it's my understanding that superannuants are covered by the government against a complete collapse of a super fund. This guarantee does not extend to Self Managed Super Funds or funds held outside the super system.
Prior to the GFC anyone with all their super invested only in fixed interest (eg bonds) and cash (ie bank deposits) would have been most dissatisfied with their returns when compared with those funds that had exposure to equities. The market value of fixed interest bonds does change over time but are less volatile (usually) than equities.
The "Too good to be true" dictum does not appear to be involved here but I quote it as it is usually included in this trio of oft quoted clichés.
Jim
Cupie said
05:03 PM Oct 31, 2012
_wombat_ wrote:
a word of advice, I know its too late for some, but DO NOT EVER SEEK ADVICE FROM A FINANCIAL ADVISOR, they are only after getting a slice of your hard earned savings.
Go to centrelink and ask to see a financial adviser, it will cost you nothing and their advice is spot on, you do not need to be a pensioner to see a FIS anybdoy can request an appointment.
Whilst I understand what Wombat is saying here, I can't say that I agree. Though these days with a rather stable portfolio, I do wonder sometimes what I am getting for my money from the FA (as different from those people who manage the various asset classes).
I my case when I accepted a 'package' I had 3 months of under employment before I finished up. As at that time my employer paid for visits to financial planners & investment seminars (plus redeployment training) for outgoing people, I took maximum advantage. By the time I had finished with 5 FAs, I reckon that I could have done their retirement investment portfolio planning jobs. Though on reflection I reckon that they mostly got it wrong. They were too focused on the wealth creation phase rather than the retirement part of the journey.
All in all, I got lots of good information from Financial Advisors so that I was equipped to make value decisions on where & how to place my funds. I chose a FA who fitted my needs & who efficiently did all the transactions to set up my income streams. Though I did get a rather large shock when the TAX office sent me a bill for well over $100,000 for breaching the RBL (Reasonable Benefits Limit). This was due to a double entry by the FA's office. So I got to be well versed in the RBL process, just in time for it to be abolished.
In my experience there is really no alternative for the majority of us, to using Financial Advisors. But keep firmly in mind the old adages listed by jimricho.
ps .. I did go to a Centrelink person too, who agreed with my plan. Went to several of their seminars too.
_wombat_ said
06:14 PM Oct 31, 2012
Cupie, did you pay a upfront fee to your FA or are you paying an ongoing commission, it's the ongoing commission guys you have to watch, could end up costing a lot of cash
Cupie said
09:21 PM Oct 31, 2012
_wombat_ wrote:
Cupie, did you pay a upfront fee to your FA or are you paying an ongoing commission, it's the ongoing commission guys you have to watch, could end up costing a lot of cash
The company paid upfront fees for the original consultations & plans.
We pay a ongiong service fees, that include a regularly updated plan. We have regular reviews. FA does any changes that we require without charge. We have regular lunches in a city hotel with great guest speakers. Usually one on financial stuff & one on lifestyle.
Of course we get regular financial/economic updates on performance, trends & forecasts. I get others (freebies) from high profile consultancy firms.
Retreat said
05:03 PM Nov 4, 2012
This conversation has brought back memories of the difficult financial decisions that I needed to be made when I retired. Here, I have tried to make light of what really was a stressful period.
Guess What? some numbers have been changed to conceal my poorness.
Our Retirement Slogan Time Rich Cash Poor
For years you have been seeing the light at the end of your working tunnel getting bigger, and bigger. Then it happens; No more bosses, no more winging wining customers, no more demanding clients. NO MORE STRESS!!! But hang on..there will be no more salary coming in either. Now you are retired and about to become a grey nomad. But first you need to take stock. 1. Exactly how much is in the superannuation fund 2. how long will it last and how long will we live 3. Who is looking after this fund, are they competent 4. Is our money being looked after in my interest or the interest of the fund manager All very important questionsyes. 1. The superannuation statement say we have $M1 2. Using the rules of thumb (these numbers seem to be very consistent in most retirement guides); a. Retire at 55 divide by 17 = $58,800 per year Female life expectancy 85 men 81 b. Retire at 60 divide by 15 = $66,000 per year Female life expectancy 86 men 82 c. Retire at 65 divide by 13 = $77,000 per year Female life expectancy 87 men 83 3. XYZ Superannuation fund. But look!! Fees for the last two years have been greater then income received. If I had not been salary sacrificing the balance would have decreased. 4. With fees greater than income, I dont feel my money is being looked after in my best interest, but I can see the managers income is being very well looked after, by me. Ask questions and the answer will be; Shares & other investments go up and down, some years they perform better than other years, but in the long term they always go up and will on average show a 5% to 8% margin above inflation. I think I can see where the bull has been and I need to watch where Im walking. Action Plan. Now that I have retired and having never been older at any time before it is only natural to believe that I have more knowledge and more wisdom than ever before, plus I have more money than I have ever had before and it is common knowledge that no one will look after your money as well as you will yourself. SOLUTION is a self-managed superannuation fund. I certainly have the time to look after a few investments, Ive got the management skills having been employed as a merchandising manager, purchased and sold several homes and dabbled a little in shares such as the Telstra float, lets go Im competent, possibly over qualified. Decision made. Lots to do, lets get started; Arrange the deed and legal docs Have the deed registered Apply for a tax file number and an ABN for the fund. All easy enough just takes a bit of time All Done. Next step draw up an investment strategy. Now this is where you really have to think about where you are going to invest and what you are going to invest in. Obvious options are; Shares, Blue chip, Industrials, Manufacturing, Mining, Services, Finance, Banking, Capital goods etc. and the list goes on and on. Then there is property, Residential, Commercial, industrial. Fixed interest, bonds, managed funds, property trusts etc., the list and options is endless. More decisions; What % of the fund should be invested into what groups to spread and manage risk. Now this is getting a bit complicated and scary, there could be another GFC and I could lose everything and I would have been responsible being the trustee of a self-managed fund; no one else to blame. Need to talk to a financial adviser. Where do I start? Ring our accountant for advice. Yes he knows them all, he attracts them like bees around a honey pot, all hoping to get leads for new clients from him. Said he was happy to provide a number of names and contact details, but would not endorse them because he had no idea if they were value for money. Some of the older ones were originally just life insurance agents who somehow became licenced financial advisors without any tertiary education. Very good insurance salesman with very much a insurance commission based mindset, but questionable as financial advisors. Suggested I worry more about capital protection rather than income and try one of the larger companies that have been established for yonks and employing university graduated advisors. He also warned that the industry is legally corrupt with big placement and trailing commissions going to the advisors. Rang this large company who sent out this very nice young chap, snappy dresser, nice BMW car, good talker, lots of charts and he smelt nice to boot. (Wonder who paid for the snappy cloths and the BMW; would not be over charged clients would it?) He is much too young to advise because of his years of experience, so he must be extraordinarily well qualified and extremely smart to advise clients who have had an additional 40 plus years of life experiences. Do I need to re-think my theory that experience & wisdom come with the passage of time? Maybe through the evolution of the human race experience and wisdom has been installed into the Y Generation in the form of a microchip. Im sure Microsoft has more ownership of this generation then parents.
His fees; $6,000 to draft up a financial plan called an SOA (statement of advice) in the industry, then there is the annual service fee of $5,000 for on-going advice. And I loved it when he said you get what you pay for and I am quoting you much less than other clients because I really want your business. You will be getting excellent value for money. (Need to watch where I'm walking, just steped into some Bull S__t). When pushed as to what returns I could expect for paying this astronomical fee the response was a classic; How long is a piece of string? Now, Im not sure, but I think I was just asked to pay $11,000 for the opportunity to tell this whiz kid how long a piece of string is without any warrenty or guarantee of quality. Now lets do some adding up. The deed & legal docs $500 + taxation returns and annual audit $2,500 + the financial advisor $11,000 all comes to $14,000 which is 1.4% of the fund. Im asked to sign here and initial each page (including the umpteen pages of disclaimers) but I still dont know what Im getting Ohyes I remember its called expert advice, but it is invisible. I cant see it, I cant touch it at least not until after I sign here and pay for it. (Does the Buyer Beware adage still apply if you pay in advance for a shorter than expected piece of string from a government licenced financial advisor? I was once told that an expert (ex-spurt) is a drip under pressure.
Self De-briefing. How can we make a value judgement of a financial advisor if we dont know what our funds will be invested in. Financial advisors were involved in the recent collapse of Storm, Westpoint, Trio, Opes Prime and other financial service providers.
Realisation hits. One bad investment and there is the real possibility of expenses exceeding income, we could easily outlive our money. Besides, I have no intention of exiting this world in 22 years at the age of 87, (actually I dont intend to die.. ever, as I see no future in passing on). I must just accept that the super fund will run dry, before I arrive at that great happy hour up in the sky hosted by our maker. After all now that Im not working I have more time to spend and enjoy our money to become Time rich and Cash poor. And the wifes shopping hours are no longer interrupted by working hours, she is ecstatic. Now I am back to where I started asking is our money being looked after in our best interest? Is the fund manager competent? By emerging myself in the Self-Managed Superannuation fund, I find myself still to be surrounded by rip off merchants and an incompetence management, me. Should have given all our money to the kids (they will eventually extract it anyway) gone on the pension and hooked up the caravan, no worries, no stress, no decisions to be made except when happy hour starts and ends and should I have a red or a white.
Have now changed our retirement slogan from Time Rich Cash Poor to
Crusin Boozin Snoozin
Cupie said
05:17 PM Nov 4, 2012
Hi "Retreat'
A great analysis of the situation.
Well said Barry. Gave me a good (cynical) laugh to start my sunday.
I hope none of you had money invested in the Banksia Group. If so they have gone into receivership, your travels will be at an end.
They are mainly country Victoria based but also have branches in SA and NSW. A fairly small company.
The receivers have moved in, debts of $660 million I think they said, with no hope of any of the investors getting any back.
Feel sorry for them all.
The trouble with this one too is it is not govt protected, they said on the news.
5. Is the investment secure?
Return of capital invested in the Fund is not guaranteed. However, each loan application is assessed with consideration of the lending policy, valuation report, loan-to-valuation ratio, serviceability, financial reports, credit history and other information deemed necessary to minimise risk. Your investment is secured by a registered first mortgage over real property in Australia.
If you put your money under the mattress, it won't earn a huge rate of interest, but it will be guaranteed if you don't tell anyone where it is
To make it worse , they apparantely knew several months ago that they were in trouble but didn't report it .
The top brass should be jailed .
you can also have have gov guareneed with a credt union I would stay away from the big banks.
I also do not feel sorry for the people who lost money in this Banksia Group because they put their money in because it was a slighly higher interest, they thought they were getting a better deal but did not check out the fine print in most cases.
ASIC apparently new 18mths ago...they are as useless as !!!!..........
-- Edited by barina on Saturday 27th of October 2012 06:14:09 PM
How does the saying go ?
"The higher the return, the higher the risk"
Methinks we are all comfortable with higher risk when the market is on the up but are so ready to cry poor buggar me & blame others when the downside inevitably arrives.
I don't think that cash under the bed is the answer. I'll stay with the biggies with a moderate position.
Edit ..
I was thinking about my post & on reflection it may have appeared that I have no sympathy for those who have lost their hard earned. Just wanted to put the record straight. I emphathise with them (don't want to think about how much I lost on the GFC etc). I do feel heartfelt sorrow for them.
Perhaps many of us were good at our jobs & put away our little nest egg, but we were often not well equipped to enter into the complex dog eat dog world of investments & superannuation. We often placed (sometimes misplaced) our trust in so called Financial Advisers. In our case we were somewhat fortunate as we had a close and lasting family association with the CBA & took that path.
I sometimes wish (now-days) that I had taken the 'drip feed' Commonwealth Public Service Superannuation option that paid a lifetime indexed pension rather than taking the lump sum option. All things have their downside though. The 'drip feed' of 45-50% of your retirement salary, gives only 5/8 of that pension to a surviving partner & there is not a lump sum of cash available for trips & other capital expenditure. It's often taxable as income too & 100% taken into account for Centrelink purposes as well. In any case I had to make that decision many years before retirement & I was not equipped or inclined to make an informed choice.
ps. The last paragraph is based on my recollection of the CPS Superannuation conditions at the time of my retirement & may not be 100% accurate.
Hate to say it but it was Little Johnny Howards Govt in its last term when it almost doubled the allowances for assesable capital & income for pension purposes, that made my retirement as comfortable as it is.
-- Edited by Cupie on Sunday 28th of October 2012 12:16:21 PM
-- Edited by Cupie on Sunday 28th of October 2012 12:18:54 PM
Yes i feel sorry for the people that have lost their life savings that they
have worked so hard for.... but you can bet not a thing will be done about it
hope they get something back I know that they have gone for the higher
interest but human nature is what it is
yes, human nature is what it is BUT as vk6tnc has pointed out clause 5 reads in part:
5. Is the investment secure?
Return of capital invested in the Fund is not guaranteed.
They did work hard for their life savings BUT they did not look after it.
To put it simply they did not read the fine print.
Sorry to hear Ken......I had also heard that the interest rates were similar to the banks.....someone sure has some explaining to do that's for sure, bloody terrible to rip off the local folk who are always happy to support the local Joe.......
-- Edited by barina on Monday 29th of October 2012 08:06:25 PM
The directors and accountants and also the internal and external auditors have a lot to answer expecially since their accounts were signed off only weeks ago
Its not like people were being greedy as the interest rate is not a lot higher than banks, the greed comes in when the financial people want more than a fair share of fees
My holidays and travelling is on hold
Ken
Ken, sorry to hear you maybe involved with this collaspe and I agree with you that the directors, accountants and auditors should be held responsible but as in all big business they will get away with what they have done, if you or I did the same we would be behind bars.
the problem is that someone is maybe overseas by now.
Very true and they tie up the money in wifes name and family trusts. They should be able to be confiscated when they have been built with investors money. But ASIC is weak and therfefore nothing wil happen, The only crooks made to pay are when you rip off the Tax Man.........
ASSIC had been thru Banksia recently and by all accounts all was ok
class action against them and auditors may be on the cards
Ken
There are three well-worn clichés when it comes to investing...
1. The greater the reward, the greater the risk.
2. If it seems too good to be true, it probably is.
3. Don't put all your eggs in one basket..... diversify your investments across asset classes and types of investments.
These "rules" have been around forever and are repeated "ad-nausea" but they still hold true. No one that follows these guidelines loses all their hard earned in one hit.
The bank deposit guarantee holds for all banks, not just the Big Four but no government anywhere can ever guarantee all investments. Doing so would create the "moral hazard" of being able to invest in anything, no matter how risky, in the knowledge that nanny government will bail them out.
That may be true in most cases but with banksia the reward was not that much greater and has been a stable company for about 60 years and the interest was not to good to be true
Putting all eggs in one basket may also be true but look at the GFC and super returns that are in different baskets and you still lose
If we and employers have to put into super for retirement then it should be in Govt bonds or cash where you get a return and your capital is safe
The world unfortunatelty is full of the get rich quick schemes but this was not one of them
Ken
Sorry to hear your travelling etc is on hold Ken and Lyn - hopefully something will be rescued for the investors. A friend of mine took a large package from the semi govt job he had been at for probably 30 years. He took the advice of the financial advisor who was employed by the company, and managed to lose a huge sum in the first financial downturn, put it down to experience, continued on with the same financial advisor, and lost more in the last GFC -
The strangest thing is - he was an accountant, and very high up in the organisation he was employed by - go figure - if he couldn't get it right, how are us little folks supposed to manage.
a word of advice, I know its too late for some, but DO NOT EVER SEEK ADVICE FROM A FINANCIAL ADVISOR, they are only after getting a slice of your hard earned savings.
Go to centrelink and ask to see a financial adviser, it will cost you nothing and their advice is spot on, you do not need to be a pensioner to see a FIS anybdoy can request an appointment.
Super losses in the GFC were a result of losses in the underlying investments. In general these investments were diversified and as such the losses were spread and did not result in investors in these funds losing everything. These losses followed some very good gains in the years prior to the GFC. Unfortunately this didn't benefit those who hadn't been in a fund for very long.
Correct me if I'm wrong but it's my understanding that superannuants are covered by the government against a complete collapse of a super fund. This guarantee does not extend to Self Managed Super Funds or funds held outside the super system.
Prior to the GFC anyone with all their super invested only in fixed interest (eg bonds) and cash (ie bank deposits) would have been most dissatisfied with their returns when compared with those funds that had exposure to equities. The market value of fixed interest bonds does change over time but are less volatile (usually) than equities.
The "Too good to be true" dictum does not appear to be involved here but I quote it as it is usually included in this trio of oft quoted clichés.
Jim
Whilst I understand what Wombat is saying here, I can't say that I agree. Though these days with a rather stable portfolio, I do wonder sometimes what I am getting for my money from the FA (as different from those people who manage the various asset classes).
I my case when I accepted a 'package' I had 3 months of under employment before I finished up. As at that time my employer paid for visits to financial planners & investment seminars (plus redeployment training) for outgoing people, I took maximum advantage. By the time I had finished with 5 FAs, I reckon that I could have done their retirement investment portfolio planning jobs. Though on reflection I reckon that they mostly got it wrong. They were too focused on the wealth creation phase rather than the retirement part of the journey.
All in all, I got lots of good information from Financial Advisors so that I was equipped to make value decisions on where & how to place my funds. I chose a FA who fitted my needs & who efficiently did all the transactions to set up my income streams. Though I did get a rather large shock when the TAX office sent me a bill for well over $100,000 for breaching the RBL (Reasonable Benefits Limit). This was due to a double entry by the FA's office. So I got to be well versed in the RBL process, just in time for it to be abolished.
In my experience there is really no alternative for the majority of us, to using Financial Advisors. But keep firmly in mind the old adages listed by jimricho.
ps .. I did go to a Centrelink person too, who agreed with my plan. Went to several of their seminars too.
Cupie, did you pay a upfront fee to your FA or are you paying an ongoing commission, it's the ongoing commission guys you have to watch, could end up costing a lot of cash
The company paid upfront fees for the original consultations & plans.
We pay a ongiong service fees, that include a regularly updated plan. We have regular reviews. FA does any changes that we require without charge. We have regular lunches in a city hotel with great guest speakers. Usually one on financial stuff & one on lifestyle.
Of course we get regular financial/economic updates on performance, trends & forecasts. I get others (freebies) from high profile consultancy firms.
This conversation has brought back memories of the difficult financial decisions that I needed to be made when I retired. Here, I have tried to make light of what really was a stressful period.
Guess What? some numbers have been changed to conceal my poorness.
Our Retirement Slogan Time Rich Cash Poor
For years you have been seeing the light at the end of your working tunnel getting bigger, and bigger. Then it happens; No more bosses, no more winging wining customers, no more demanding clients. NO MORE STRESS!!! But hang on..there will be no more salary coming in either.
Now you are retired and about to become a grey nomad. But first you need to take stock.
1. Exactly how much is in the superannuation fund
2. how long will it last and how long will we live
3. Who is looking after this fund, are they competent
4. Is our money being looked after in my interest or the interest of the fund manager
All very important questionsyes.
1. The superannuation statement say we have $M1
2. Using the rules of thumb (these numbers seem to be very consistent in most retirement guides);
a. Retire at 55 divide by 17 = $58,800 per year Female life expectancy 85 men 81
b. Retire at 60 divide by 15 = $66,000 per year Female life expectancy 86 men 82
c. Retire at 65 divide by 13 = $77,000 per year Female life expectancy 87 men 83
3. XYZ Superannuation fund. But look!! Fees for the last two years have been greater then income received. If I had not been salary sacrificing the balance would have decreased.
4. With fees greater than income, I dont feel my money is being looked after in my best interest, but I can see the managers income is being very well looked after, by me. Ask questions and the answer will be; Shares & other investments go up and down, some years they perform better than other years, but in the long term they always go up and will on average show a 5% to 8% margin above inflation. I think I can see where the bull has been and I need to watch where Im walking.
Action Plan.
Now that I have retired and having never been older at any time before it is only natural to believe that I have more knowledge and more wisdom than ever before, plus I have more money than I have ever had before and it is common knowledge that no one will look after your money as well as you will yourself.
SOLUTION is a self-managed superannuation fund. I certainly have the time to look after a few investments, Ive got the management skills having been employed as a merchandising manager, purchased and sold several homes and dabbled a little in shares such as the Telstra float, lets go Im competent, possibly over qualified. Decision made.
Lots to do, lets get started;
Arrange the deed and legal docs
Have the deed registered
Apply for a tax file number and an ABN for the fund.
All easy enough just takes a bit of time All Done.
Next step draw up an investment strategy. Now this is where you really have to think about where you are going to invest and what you are going to invest in. Obvious options are;
Shares, Blue chip, Industrials, Manufacturing, Mining, Services, Finance, Banking, Capital goods etc. and the list goes on and on. Then there is property, Residential, Commercial, industrial.
Fixed interest, bonds, managed funds, property trusts etc., the list and options is endless.
More decisions; What % of the fund should be invested into what groups to spread and manage risk. Now this is getting a bit complicated and scary, there could be another GFC and I could lose everything and I would have been responsible being the trustee of a self-managed fund; no one else to blame.
Need to talk to a financial adviser. Where do I start? Ring our accountant for advice.
Yes he knows them all, he attracts them like bees around a honey pot, all hoping to get leads for new clients from him. Said he was happy to provide a number of names and contact details, but would not endorse them because he had no idea if they were value for money. Some of the older ones were originally just life insurance agents who somehow became licenced financial advisors without any tertiary education. Very good insurance salesman with very much a insurance commission based mindset, but questionable as financial advisors. Suggested I worry more about capital protection rather than income and try one of the larger companies that have been established for yonks and employing university graduated advisors. He also warned that the industry is legally corrupt with big placement and trailing commissions going to the advisors.
Rang this large company who sent out this very nice young chap, snappy dresser, nice BMW car, good talker, lots of charts and he smelt nice to boot. (Wonder who paid for the snappy cloths and the BMW; would not be over charged clients would it?) He is much too young to advise because of his years of experience, so he must be extraordinarily well qualified and extremely smart to advise clients who have had an additional 40 plus years of life experiences. Do I need to re-think my theory that experience & wisdom come with the passage of time? Maybe through the evolution of the human race experience and wisdom has been installed into the Y Generation in the form of a microchip. Im sure Microsoft has more ownership of this generation then parents.
His fees; $6,000 to draft up a financial plan called an SOA (statement of advice) in the industry, then there is the annual service fee of $5,000 for on-going advice. And I loved it when he said you get what you pay for and I am quoting you much less than other clients because I really want your business. You will be getting excellent value for money. (Need to watch where I'm walking, just steped into some Bull S__t). When pushed as to what returns I could expect for paying this astronomical fee the response was a classic; How long is a piece of string? Now, Im not sure, but I think I was just asked to pay $11,000 for the opportunity to tell this whiz kid how long a piece of string is without any warrenty or guarantee of quality.
Now lets do some adding up. The deed & legal docs $500 + taxation returns and annual audit $2,500 + the financial advisor $11,000 all comes to $14,000 which is 1.4% of the fund. Im asked to sign here and initial each page (including the umpteen pages of disclaimers) but I still dont know what Im getting Ohyes I remember its called expert advice, but it is invisible. I cant see it, I cant touch it at least not until after I sign here and pay for it. (Does the Buyer Beware adage still apply if you pay in advance for a shorter than expected piece of string from a government licenced financial advisor? I was once told that an expert (ex-spurt) is a drip under pressure.
Self De-briefing. How can we make a value judgement of a financial advisor if we dont know what our funds will be invested in. Financial advisors were involved in the recent collapse of Storm, Westpoint, Trio, Opes Prime and other financial service providers.
Realisation hits. One bad investment and there is the real possibility of expenses exceeding income, we could easily outlive our money. Besides, I have no intention of exiting this world in 22 years at the age of 87, (actually I dont intend to die.. ever, as I see no future in passing on). I must just accept that the super fund will run dry, before I arrive at that great happy hour up in the sky hosted by our maker. After all now that Im not working I have more time to spend and enjoy our money to become Time rich and Cash poor. And the wifes shopping hours are no longer interrupted by working hours, she is ecstatic.
Now I am back to where I started asking is our money being looked after in our best interest? Is the fund manager competent?
By emerging myself in the Self-Managed Superannuation fund, I find myself still to be surrounded by rip off merchants and an incompetence management, me.
Should have given all our money to the kids (they will eventually extract it anyway) gone on the pension and hooked up the caravan, no worries, no stress, no decisions to be made except when happy hour starts and ends and should I have a red or a white.
Have now changed our retirement slogan from Time Rich Cash Poor to
Crusin Boozin Snoozin
Hi "Retreat'
A great analysis of the situation.
Well said Barry. Gave me a good (cynical) laugh to start my sunday.