SMSF Investment StrategiesSharing Simple Strategies for Self Managed Super Funds
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Part 2 – Elephants Can’t Play Pool
The first post in this mini series, Elephants Can’t Dance, talked briefly about the inability of retail super funds to act quickly. In this post I talk about the reason for us wanting control of our funds, and in the final post, I’ll cover the third key reason why we started our own SMSF, managing and protecting.
When I actually got around to writing this, I realized that control means different things to different people. In fact, some people feel that they are in control by letting others do their work, or in this case, letting the so called professional fund managers manage their funds. This made me give consideration to what I really mean by control. Rather than, as it relates to above, meaning “have power over”, or “be in command of”, the word control is used here means “directly manage”. That is to say that with respect to our investments we wanted the ability to directly manage what we want to do when we want to do it.
With retail superannuation funds, the only real control one has is to select which investment mix you want and possibly some asset allocation classes within these. I don’t know about you, however, it was pretty much set and forget for us. We had money in retail superannuation funds and ended up working overseas for many years, never giving any consideration to how this was really being managed. It was really a case of out of sight – out of mind for us, which is really pretty scary given the amount of money involved. Generally, people will spend more time working and effort working out what is the best LCD television or which laptop computer they will buy rather than determining which investments are best for their super fund are. In reality, a person’s superannuation is likely to become their second largest asset, if not their largest asset later in life. Nurturing it now will provide benefits in the long term.
As we both became more financially educated and confident in our own ability to manage our investments, the thought of letting those who we don’t know and who don’t know us do this on our behalf became untenable. As we learned more about how managed funds were operated and how they are sold to retail investors the more we believed that we were actually taking more risk by stay with these funds. The article from the Business Age, Dirty Secrets of Financial Planners, sums up our views of financial planners very well.
We had educated ourselves so that we could make good investment decisions, we understand factors that influence the markets, we look at both technical and fundamental analysis and we also have the skills and methods of hedging / protecting our investments (I’ll talk about this more in the final of this mini series – Elephant’s Can’t Juggle Eggs).
We now have control of our investments.
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