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    Self-Managed Superannuation in Retirement: a Personal History Through the Global Financial Crisis
    Self-Managed Superannuation in Retirement: a Personal History Through the Global Financial Crisis
    Self-Managed Superannuation in Retirement: a Personal History Through the Global Financial Crisis
    Ebook155 pages1 hour

    Self-Managed Superannuation in Retirement: a Personal History Through the Global Financial Crisis

    By Robert T. Gemmell

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    About this ebook

    This is a personal story and is in no way to be taken as financial advice. I have described the successes and failures that were experienced during the ten years from 2005 to 2016, a time when the financial markets plunged due to the global financial crisis (GFC) and the subsequent recovery. Investments were made in stocks, property trusts, mortgage funds, and fixed interest. With this approach, an annual income from dividends and franking, distributions, and fixed interest was maintained. Although the capital and income were reduced from 2008 through to 2016, they have increased annually. Long may it continue.

    Fortunately, the fund was started in 2005 and double-figure returns were received through 2006 to 2008. At this time, the investing game seemed easy. Everything changed with the GFC. The value of our shares decreased by 56 percent and the fund by 40 percent; it was a worrying time for everybody. In this book, the changes made to the portfolio to combat the fall in income and value of the fund are described. And although in 2016 the fund has not reached 2007 levels, it shows signs of recovery.

    This book does not outline a fail-safe method for running a self-managed superannuation fund. Do not believe anyone who professes to have one. However, the information provided hopefully will encourage other retirees who wish to set up their own self-managed superannuation funds. Inevitably, mistakes will be with made. Everybody will make the wrong choices at times and lose money. In the long run, one just has to pick more winners than losers.

    LanguageEnglish
    PublisherXlibris AU
    Release dateAug 17, 2016
    ISBN9781524515812
    Self-Managed Superannuation in Retirement: a Personal History Through the Global Financial Crisis
    Author

    Robert T. Gemmell

    The author was born in Glasgow, Scotland, in 1940 and migrated to Australia in 1962. He has a bachelor of science (1970) and a master of science (1973) from the University of New South Wales, a doctor of philosophy (1982) from the University of Queensland, and finally a doctor of science (1995) again from the University of New South Wales. Employment was initially with the Anatomy Departments of Glasgow and New South Wales Universities followed by the Australian Atomic Energy Commission, the Commonwealth Scientific Industrial Energy Organisation, and finally, the Anatomy Department in the University of Queensland, from which he retired as the head of department in 2005. His research interests were in mammalian reproduction. The major advantage obtained from his academic career, which aided the management of his superannuation fund, was the maintenance of accurate records. Throughout his employment with the University of Queensland, he was a member of the UniSuper superannuation system. With the assistance of a financial planner and an accountant, a self-managed superannuation fund was set up in 2005 with the author and his wife as trustees. From 1996 to 2005, money was invested in mortgage funds, property trusts, and stocks, and these funds along with the monies from UniSuper were transferred into the new self-managed superannuation fund. In 2005, 33 percent of the fund consisted of stocks, 41 percent in property trusts, 24 percent in mortgage funds, and 2 percent in cash. These percentages have changed over the last ten years, and in 2016, the proportions were 65 percent in stocks, 33 percent in property trusts, 1 percent in mortgage funds, and 1 percent in cash. The author is a long-term investor and has outlined the conditions for buying and selling stocks and property trusts. He has written this book with the aim of assisting other retirees with self-managed superannuation funds.

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      Book preview

      Self-Managed Superannuation in Retirement - Robert T. Gemmell

      Copyright © 2016 by Robert T. Gemmell.

      All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

      Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

      Certain stock imagery © Thinkstock.

      Rev. date: 08/15/2016

      Xlibris

      1-800-455-039

      www.Xlibris.com.au

      745068

      CONTENTS

      Acknowledgements

      Preface

      Chapter 1    Getting Started

      Setting up the superannuation-funded fund

      Cost of setting-up and running a self-managed superannuation fund

      Brokerage fees

      Which sectors to invest in?

      Shares

      Property trusts

      Mortgage funds

      Cash, fixed interest

      Different requirements of superannuation funds

      Why bother?

      Where to start?

      The first step

      Telstra, Tabcorp, IAG, Bank of Queensland, Unitab, BT Select Markets Trust, Cromwell Property Trust, Mariner Car Park Property Trust (the Sydney Opera House Car Park), Opus Property Trust No. 18, Challenger Property Trust/MFS (the Park Hyatt Hotel, Circular Quay)

      Chapter 2    Diversification

      Investment strategy for our Superannuation Fund

      Shares

      Property Trusts

      Mortgage Funds

      Cash, fixed interest, term deposit

      Cash flow

      Chapter 3    Stocks

      Frequency of stock purchases and sales

      Early stock purchases:

      Telstra, Tabcorp, IAG, Bank of Queensland, Unitab

      Method of selection:

      Stocks that should not have been purchased due to deviation from my plan:

      Transonic, MFS, Octaviar, Repco

      Changing circumstances that influenced the share price:

      Takeovers

      Should we keep or should we sell?

      Good and steady shares, consider keeping forever

      ‘Let us wait and see’ shares

      More recent purchases

      Flight of fancy

      Purchases based on value

      Result of changing world markets

      Summary

      Chapter 4    Property Trusts

      Direct property

      Commercial property trusts

      Frequency of property trust purchases and sales

      Unlisted property trusts

      Listed Property Trust

      Managed property trusts

      Managed Funds, property and shares

      Chapter 5    Mortgage Trusts and Funds

      LM Mortgage Income Fund

      City Pacific Mortgage Trust

      Australian Unity High Yield Mortgage Trust

      Chapter 6    The Global Financial Crisis

      Introduction

      The effect on stocks

      The effect on property trusts

      The effect on mortgage funds

      The effect on my superannuation fund

      Chapter 7    Conclusion

      How much capital do you need to retire?

      Comparison of self-managed superannuation funds with Australian Prudential Regulation Authority Funds (APRA)

      Returns for superannuation funds

      What I have learned

      Enjoy life

      Records

      Plan

      Selling stocks and property trusts

      Diversification

      The percentage of funds in stocks, property trusts, mortgage funds and cash.

      Changes in the economy

      Losing money

      Monitor

      Where to from now

      Glossary

      TABLES AND GRAPHS

      Table 1. The percentage dividend plus franking against original cost of stock in the fund from June 2007 to June 2016

      Table 2. The date of first purchase, the total dividend plus franking received, the original cost and present value and the gain/loss of stocks in the fun

      Table 3. The share price at the end of the financial year from 2006 to 2016 for stocks in the fun

      Table 4. The percentage dividend plus franking against original cost of stock of terminated stocks from 2006 to 201

      Table 5. The date of first purchase, the total dividend plus franking received, the original and present value, and gain/loss of terminated stock

      Table 6. Share price at the end of the financial year and when sold for terminated stocks from 2006 to 201

      Table 7. The percentage distribution against original cost of property trusts in the fund from 2007 to 2016

      Table 8. The date of first purchase, the total distrbutions, the original cost, final value and the financial gai

      Table 9. Unit price from 2006 to 2016 at the end of each financial year is listed

      Table 10. The percentage distribution against original cost for terminated property trusts from 2007 to 201

      Table 11. The date of first purchase, total amount of distribution, original cost, the terminal value and gain/loss for terminated property trust

      Table 12. Unit price of terminated property trusts from 2006 to 2014

      Table 13. The date of first purchase, the total amount of distributions received, the original cost, the amount received as redemptions, the present value and gain/loss of mortgage funds in the fun

      Table 14. Stocks were sold and bought during and after the Global Financial Crisi

      Table 15. Property trusts were bought and sold from 2006 to 201

      Table 16. The yield and value of stocks and property trusts for 2013/14, 2014/15 and 2015/16

      Graph 1 The percentage value of the superannuation fund, stocks, and property trusts and mortgage funds at 30 June, in years 2006 to 2016

      Graph 2 The percentage income produced by the superannuation fund, stocks, property trusts, and mortgage funds at 30 June in years 2006 to 2016

      Acknowledgements

      I would like to thank those who have guided me into the area of investment and who share my interest in the subject. While I will not list names, I am sure the individuals will be able to identify themselves. Firstly, I must thank my Brisbane financial adviser for a conversation during a St. Lucia Rotary Club dinner that made me consider setting up a self-managed superannuation fund. We are still friends and I report my results every six months and await his comments. My Brisbane accountant who set up the fund is still a friend and continues to submit our tax returns each year. Since moving to Sydney, I have become a member of the Australian Shareholders Association and I look forward to the monthly meetings and discussions with fellow shareholders. The Investment Discussion Group of the University of the Third Age meets at the Burwood RSL every two weeks, and I have gained greatly from the knowledge of the members. I now live in Balmain, and I have a dog. During my walks I have come into contact with other dog walkers who have a shared interest in investment and superannuation, and I trust that this helpful interaction will continue. The Balmain library is a repository of many books on finance and investment, and one of the advantages of being retired is to be able to sit in the library and read the daily newspapers including the Financial Review. I wish to thank my friends in the Writers Group of WEA, Bathurst Street, Sydney, for their guidance in improving my writing style. Finally, the most important person who has supported my interest in investment is the other trustee in our superannuation fund, my wife, Erica. Although not as enthusiastic as myself, she has a very good understanding of self-managed superannuation. Her enthusiasm wanes slightly when I launch into a monologue about the economy or the outlook of some company. Nevertheless, without her support and her editing ability to change my Glasgow slang into readable English, this book would never have been finished.

      Preface

      As retirement approached in 2005, I realized that my superannuation was in a fund in which I would have limited say on the investment strategy. I decided to transfer the funds from Unisuper, the fund for university employees, into a self-managed superannuation fund. Dissatisfaction with Unisuper was not the cause for this action. I wanted more control over the funds, and I had also developed an interest in investments. I was a biological scientist with a limited understanding of the financial world. However, I had purchased stocks, property trusts and mortgage funds prior to retirement and with the formation of the self-managed superannuation fund, I increased

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