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.

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

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

bill12 wrote:

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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

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 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.

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 wrote:

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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

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 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.

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

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_ wrote:

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barina wrote:

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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.......

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 the problem is that someone is maybe overseas by now.

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 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.........

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.

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.

ken thomas wrote:

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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, 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

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