Just looking for some financial advice for my parents who Have access to their superannuation funds, they are around 70 years old. The past 2 months their super has fallen dramatically due to coronavirus. I have sinced moved them to a stable investment option. Just wondering what you had recommended for your parents in a similar scenario? Wait it out or withdraw it all?
Thank you.
Superannuation for parents (70 years old)
LTeagan Brighton on 13/03/2020 - 16:51
Comments
I'd be cautious about withdrawing from super after age 65 (soon to be 67) because its so hard to get money back in after these ages.
If your parents will be paying tax outside of super, leaving assets in super might be the most tax-advantageous structure available (if converting to a pension in super there is no tax on earnings).
A middle-ground might be going to a cash option within super if you're concerned that this market uncertainty continues.
At that age they should be invested in an option that has a quite balanced mix of assets, so if shares fall, for example, the bonds rise, and cash stays stable etc.
A big chunk of the money retirees live on is earned after they retire, by keeping their investments producing income and capital returns, even as they withdraw living expenses.
This means you can't just "take it out" as you need to have somewhere to put the savings so it produces the needed return to support them for years to come.It is very likely the stock market will have several days with >5% upward leaps in the coming weeks, but maybe also volatile down days.
If you remove your money from stocks, you ensure you miss any up days.I can't give you advice, but I moved a third of the portion of my super in cash into equities today, and I will likely do the same again early next week. When the stock market falls, think of it as the same companies you looked at a month ago are now on sale.
so if shares fall, for example, the bonds rise, and cash stays stable etc.
Unfortunately at the moment shares and bonds not looking too flash.
Horse has bolted - if they have some savings outside super to live off then the worst thing you can do right now is move them to stable - that means when the recovery comes they're going to miss out on it
Also agree on leaving it in super unless there's a specific need for it outside of super. Its a tax advantageous environment so use it while you can.
What did their financial advisor suggest?
He is self-isolating and only said to ask ozbargain.
It's up to us now…
Please stop before you inflict too much damage. You've just crystallised their losses. I appreciate they're 70 y/O but their wealth is still within their super and is likely to recover in the next 5-10 years of their life.
It's best to diversify. Yes you've moved to cash but not a great idea to do that with all the money. It might be a better idea to diversify and put some % in cash/bonds/fixed income and some in blue chip/growth etc.
There's a lot more to this from a tax perspective (single vs couple), plus also strategy depends on where else their wealth is tied, their health, goals etc.
Please get some advice. Anything I said is not advice. General in nature only. Etc etc. Disclaimers!!!
I hope you earn good money OP because that stable investment option means they won't recover their losses. Maybe get some qualified financial advice next time.
Good job. They will never recover their losses when the market rebounds now!
Not quite.
If they change back to equities, they can go back in at a cheap price :)
If they can just leave it, as it will likely go back up as quick as it came down, or at the very least over the course of a year or so.
If they have cash in their super I’d be buying up some more, as shares are dirt cheap nowMy position is I have lost heaps, but I’d never sell otherwise I’d neck myself if they went up, I’d rather just see what happens, if I lose more than that’s life.
Thanks everyone for your comments! Oh no.. 😖 I wish I had asked advice before I did anything. I'm guessing it is too late to change back…
Where can we find financial advice? Can the financial advice provided by the superannuation funds be trusted? I hope there is a way to recover. I noticed a few comments mentioning to put a % into equities.Speak with a professional. Maybe their bank can recommended someone? Or the super company can point you in the right direction.
Hello
This is not advice
No it's probably not too late to move back into the same asset allocation as it was before :)
Prices are still pretty low. Yes you might lose some money…but not an insane amount (depending on what the original super balance was).
I'll give you an example. Someone I know had a super balance of $200k. Across the past week the balance each day fluctuated between $180k and $195k.
He moved to cash. Next day regretted it and moved back to the previous allocation.
His balance is currently at about $178k a few days later.
No biggie. This is loose change. You won't think about it in the grand scheme of things…
Financial advice can be from an accountant. It won't be financial advice but it will be advice from someone that probably knows more than the average Joe, that happens to be financial in nature. If its your normal accountant, you should expect this to be a quick 5 min phone call for free.
Otherwise call the super company. Yes it may be biased but can't be too bad. If in doubt, call a random other superfund and ask them lol (not kidding).
It's fine don't be harsh. You were trying to help. Right now prices are low. May be a good time to load up on some stocks. I have a friend buying a couple thousand dollars worth of shares every 4-6 weeks to help diversify :).
(This is money he's willing to lose), but he's buying blue chip stocks like CBA ANZ etc. He's also investing in some ETFs. There's a wealth of info out there on ETFs. Sorry I didn't realise how far off track I'm coming. Ignore shares and etf's for your parents. Let them stick to their super stuff. But you on the other hand, maybe read up and perhaps you can make some $$$
Good luck
PS old parents. High risk for contracting the virus. Buy them some masks if you can :). And sanitiser!Thanks so much for your informative post. So would it be a bad idea to stay with "stable" investment?
I'm going to talk to an accountant and call up Australian super tomorrow for advice as well.
no, not a bad idea :)
Which super fund is it?
Just check the unit prices of the fund and see if a buy/sell spread exists. As other person mentioned buy back in and take the loss, or try time to get back in. Obviously if it is going up now you may never get back in. You can monitor the stocks daily to get a rough idea if the fund will go up or down over night.
I’ve done the reverse to you and did it too quick but I’m committed now.
Thank you for your post. They are with Australian Super. I'm not sure what you mean by "see if a buy/sell spread exists". My knowledge with super is quite limited and confuses me when I did try to sit down and research all the terminology.
There is no buy/sell spread for Australian super so it’s good.
It is essentially if a unitinnthe fund is worth $1, it may be 1.01 to buy and .99c to sell, it just some funds taking a cut like a foreign exchange booth.
Hope it all goes well. Depending when you did this you may have saved them money
Take it all out and dump it in an Aussie bank share on Monday. They are nearly at 10% dividend yields again ;)
Which one you suggest
WBC probably has the most upside. ANZ or NAB probably the safer bet. CBA for the very long term play.
Ive put my parents into crypto
I've put my parents into a care home
Milan stock exchange lost 17 percent yesterday and up the Same again today, you would be spewing if you sold at the bottom
Do they need the money? If not then pray there is going to be a V shaped recovery.