SMSF Investment StrategiesSharing Simple Strategies for Self Managed Super Funds
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Christina’s Life Story Part 6: Doing What I Love
To help our readers know us better, we will be writing some posts about our backgrounds. This is Part 6 of 6 of Christina’s life story. For a complete story, please go to the “Our Story” tab on the homepage of our blog.
We moved from Kuala Lumpur to join Kingsley in Melbourne in January 2006. The first year was a tough year for everyone as we adjusted to living as a family and to other lifestyle differences such as not having a full-time maid to take care of all the housework. I was really glad that I worked from home as I had the time and flexibility help the kids settle into their new lives. It was really nice not to have to rush to the office each morning and rush to get the kids from day care each evening. I would normally start work after the kids are in school and stop work when they get home from school. Each day I have the time to cook a proper nutritious dinner which I believe is very important for the family’s health.
Unlike when I was working at a job, I enjoy every day of my work. It is really nice to be able to define what you want to do for work each day. Everyday I would check the market and manage my trades and continue to improve my trading skills. In addition to learning about trading and stock market investments, I also educated myself about other aspects of wealth creation that interested me such as property investment and taxation. I read books on property investments, learned how negative gearing works and learned about business structures like trusts that can legally help you reduce your tax. In Oct 2006, we set up SLI Series I Trust, our first hybrid trust for holding our property investments.
As my trading skills improved, we felt we were ready to take over managing more of our own money so we decided to set up SLI Superannuation Fund, our own Self Managed Super Fund in March 2007 to manage our super funds. Based on the tax laws in Australia, we could see that super was the most tax effective place for our investments. We see our SMSF as our primary vehicle to provide us with tax free income after we retire. Our timing for setting up the fund could not have been better – it took a few months to roll over our money from the retail super funds that we were with and we got all our funds out just before the global financial crisis (GFC) began in October 2007. Had we stayed with the funds that we were with, we would have lost at least 25% of what we had in the next two years.
Throughout 2006 and 2007 we completely cleaned up our financial lives. In addition to doing what I mentioned before, we also made sure we bought adequate insurance and prepared our wills so our families would be protected should something unexpected happen to either one or both of us. I really don’t think we would have done any of these things if I had continued to have a full-time job. We probably would have earned more gross income but our net worth would have stayed the same or gone backwards as most of our income goes towards increased expenses (childcare, takeway food and domestic services to name a few) and higher taxes, and our super funds get ravaged by the GFC. Worst of all, we would continue to be completely unprepared for retirement as we would not have learned how to manage our investments, which is what we will need to live on when we retire.
Throughout 2008 and 2009, we had to manage our investments though one of the worst bear markets in history. We saw many friends lose much of their retirement savings as the stock market crashed. Much of these losses could have been avoided if they knew how to use simple strategies like buying put options to protect their stock portfolio. We want to share some of these simple strategies that we have successfully used with other retail investors who manage large stock portfolios such as SMSF Trustees. In May 2009, we discovered blogs and found it to be an easy and low cost way to do this. We want to share what we have learned through this blog and point people who are interested to good sources of financial education which are either free or good value for money. Where there is no good training material currently available, we plan to develop some training videos and make them available for free. We see the blog as a “give back” where our motive is not to make money (sure we may have some ads to help cover our costs) as we should be making money from our own investment activities using the strategies we advocate. The target group of people we want to help are other SMSF trustees, who like ourselves, want to take responsibility and control of their own financial future and are prepared to invest the time to learn how to manage their own investments.
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