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sway

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Post Number: 55
Registered: 12-2005

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Wednesday, October 03, 2007 - 10:08 pm:

Hi all

I am starting a new thread here for discussion of investing in DIY super funds. I did a search of the forum but most of the existing stuff is quite old and/or scattered around many different threads. Prominent IC posters such as Ody, Eblode, Hilarius, Hershey among others seem to pop up occasionally in relation to the way they manage their SMSFs, so I guess there must be quite a bit of interest. I started up our fund recently but we are still holding the rollovers in cash at the moment. I realise that each SMSF could have different objectives depending on whether the fund is trying to grow, pay pensions, cater for younger family trustees etc.

To get the ball rolling, would anyone care to comment on proportions of fund assets held in shares, managed funds, local/international diversification, cash, bonds, property, exotics etc. Also, since this is a trading forum, what do you regard as ideal SMSF stocks? Do people tend to trade their SMSF stocks to the same extent as they would their private accounts? What about leverage, CFDs, warrants etc within super? Lots to discuss if people are interested. Hope to get a good discussion going.

regards
Sway

(Message edited by sway on October 03, 2007)

rdumas

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Post Number: 837
Registered: 11-2006

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Thursday, October 04, 2007 - 04:58 pm:

Hi Sway,

I have been running my own DIY Super Fund for a couple of years now and am in allocated pension phase which is great because it means that there's no tax to pay on either the investment profits and on the pension paid out. One of the things to be aware of with a Super Fund is that you are not allowed to borrow money for investments hence things like CFD's are not allowable.

I tend to only invest in cash and Australian equities for my Super Fund as I understand these investments. I find with overseas equities the added complication of currency exchange is a real put off for me. By this I mean that you can have good profits from an overseas stock and the currency exchange rates can be working in the opposite direction. I get my overseas exposure through investing in companies that have a global reach.

cat_lady

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Post Number: 296
Registered: 10-2006

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Thursday, October 04, 2007 - 06:54 pm:

Hi fellow SMSF trustees

we set up ours a few years ago to buy commercial premises from which to run our business. It means when I have to write the rent cheques there's no pain

Long term aim is to have a mix of commercial property, shares and cash: residential property is a possibility, but I'm waiting for the pain to bite and prices to come back to earth a lot. As to the proportions? I'll play that by ear.

I find that within the low tax environment of the SMSF I juggle my shares more within the SMSF and don't mind taking short term profits, although selling is something I generally find difficulty in doing. I'm aware that I have a higher proportion of smaller growth oriented ones within our Fund than those I hold directly. Of interest, to me at any rate, I find it much easier to carry a loss within the fund whereas I cut my losses quickly "outside".

Rudy

I thought the ATO had ruled recently that CFDs are allowed within SMSF, but with strict conditions?

cat lady

Without my morning coffee I might as well be a dog

sway

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Post Number: 56
Registered: 12-2005

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Thursday, October 04, 2007 - 09:36 pm:

Thanks Rudy and CatLady. Great to get feedback covering both the accumulation and pension stages. I also read that CFDs were OK within the fund. A quick Google located the following http://www.compareshares.com.au/comm_case.php but I will research further.

Catlady I was interested in your comment re your trading approaches inside and outside your SMSF (ie high growth within the SMSF). I guess that is because you have plenty of time to go until you can draw on the fund. By contrast, I am looking at 5 yrs before I can get access (more if I can continue trading profitably "outside" of super!) I will probably go for the Allan Hull approach with steady ROARs of around 40-50%pa. My preference is to go:

60% ASX100 shares paying say 4-5%FF divs
20% Cash deposits
20% Property fund with commercial/industrial exposure

My biggest concern at the moment is timing the entry of the 60% into shares. After all, the market is at an all time high and it IS October. Patience is not one of my virtues I'm afraid. I can't handle having cash earning 6.15% in a CMA for too long!
Sway

sway

Member

Post Number: 57
Registered: 12-2005

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Thursday, October 04, 2007 - 09:40 pm:

Just found this also
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200756/00001&recStart=1&PiT=9 9991231235958&recnum=1&tot=3&pn=J:::J

It seems you can use CFDs in an SMSF for hedging purposes.
Sway

rdumas

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Post Number: 838
Registered: 11-2006

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Friday, October 05, 2007 - 08:36 am:

Hi Cat Lady and Sway,

I must admit that I carefully checked the regulations about CFDs when I first started up my fund and haven't done so since. Thanks for that information. I will however stay away from them personally.

My preference is to be 75~80% invested in shares at this time of the bull market but am currently only 25% invested as I only re-entered the market during the recent correction. I have outlined the strategy to getting up to the desired level in the Daily Bread thread since around July. My most recent post on the subject was on Monday.