SMSF Investment StrategiesSharing Simple Strategies for Self Managed Super Funds
-->
Part 1 – Elephants Can’t Dance
This is the first of three postings I plan to make covering the 3 fundamental decisions that led us to our decision to open our SMSF: 1) ability to act quickly, 2) ability to control, and 3) ability to protect our investments. You may have already noticed that I have not made any reference to management fees, as these were not part of our primary consideration (I’ll touch on this in the third post related to managing & protecting our investments).
In the olden days, as my daughter would say, when we still had retail super funds and we wanted to change our investment portfolio, we would have to write a letter of request, wait for the original to be delivered by post, have it read, validated, and finally acted upon. This 2-3 week process could have been very costly anywhere in 2008 when the ALL ORDS dropped around 1,000 point in a number of different months. The process of transferring funds from our retail super fund into our SMSF took months, and had this happened in 2008 rather than 2007, we would be in a very different position now.
Once our funds were in our SMSF we had control, which proved to be very fortuitous for us. Although the market continued to climb in late 2007, we saw signals of a weakening market. Just before our holiday to Bali in December 2007 we discussed our choices and finalized this by immediate action that day to protect our investment. We did this buy closing all our stock positions (something that a large fund could never do easily without having a significant effect on the market). Had we still been with a retail fund, that day could have turned into many weeks (especially since we were on the cusp of Christmas festivities) and we would have been caught in the start of the downturn in the market (a.k.a global financial crisis).
In reality, as within any business, being small provides the ability to be nimble and quick. The larger you are, the greater the processes and insted of being nimble they become unwieldy, instead of being quick they become slow. With most things, having made a decision, we usually want that decision put into play as quickly and effectively as possible.
Print This Post
[...] above statement reconfirms what we have been saying in previous posts such as Elephants Can’t Dance that one of the advantages of having your own SMSF is the ability for small funds to be nimble and [...]