Any people out there who have just retired or are retired?
Hoping to get your experience on transitioning to your own independence through SPA3 investor
I’m deciding if I should go through a financial planner or just back myself and take care of it myself ? Any insights would be appreciated.
Hi Terry, I retired over the last 12 months and was concerned about sequence of returns risk.
I (my SMSF) invest substantially (but not exclusively) through the SWS systems and have been a member for over a decade.
I was somewhat apprehensive about the covid sell off but need not have been . The systems handled it very well and I have had one of my best years.
I have a number of SWS portfolios of 4-5 years duration and the returns are very satisfactory
I intend to continue with the SWS portfolios into retirement and have every confidence of sustainable returns into the future ( but acknowledge there will be periods when I will be tested!).
I have little faith in the advice industry having had only very poor outcomes in that area in the past.There may be good ones but I did not strike them.
An alternative is the better managed funds and there are some good ones you can check through Morningstar
No doubt it is a question of temperament and we are all different , but my view is no one will look after your money better than yourself.
Hope this is of some assistance. Be interested to know what you finally decide.
Hi Terry, Are you investing with your own SMSF or in your own name? If an SMSF are you in accumulation or pension mode? These plus other criteria need to be considered and much would depend on your personal circumstances, level of risk tolerance etc.
Whilst a financial planner could work out what he considers best, it may not be the best avenue for you if you believe yourself to be competent in your own financial management. Even if you are not, the path to being so is, imho, not that difficult to attain.
Personally, I would never let anyone manage my money. I would rather lose it myself than to pay someone to lose it for me.
Thanks Wakefield & Phillip
So nice to receive some feedback. Making this decision can play on your mind . I would have to agree with you both ,as letting someone else manage my affairs does not sit well with me at all .So I’m thinking subconsciously i have already made the decsion to back myself. It gives me confidence that others have paved the way with SPA 3 investor .
A question if i may Wakefield? How did you get around your sequencing of returns risk ? I have similar concerns as i will need to inject substantial amounts into my portfolio’s .
My temperament is if I’m honest, is low/med risk, so i have worked on my psychology to a comfortable zone were i have proved to myself that you don’t have to know what is going to happen in the market but i need to be fully invested to capture the market gains and definatly stick to the rules on protecting your capital .
Hi Phillip. I have a SMSF soon to be in pension phase (July1). My Personal circumstances are that i could live comfortably on a 5% return & risk tolerance as i mentioned before is Guns blazing ,kidding low to medium risk level
I hope to hear more you guys .I shall keep you posted on my journey
regards Terry
Hi Terry. I hear you as I have asked myself the same question. Here is my view. Have just retired since January 2021. Run my own SMSF now in pension mode and am 100 percent following SWS. I have used them for a decade with the view of controlling my retirement. I am now fully confident in the system to trust it (I just have to keep myself inline and follow the signals). How I see it first off. If you have say $1 million in a super fund that is charging 2% to manage your money - well that is already $20K a year you make to manage it yourself. Compliance through esuper.com.au is approx $1K and SWS fees approx $1K. I have then done up an excel spreadsheet to draw approx 4% in pension mode per year. Look at SWS white papers. This system is averaging around 10-15% year on year so all things equal you would think it is a safe bet. So plug into the excel spreadsheet 4% out a year (say on $1m) is $40K. Now add in a conservative say 7% growth and that is $70K. So the SMSF is still growing. The big thing is the next crash and when it hits how will you fair. This system is designed to get us out but I have factored in a 30% drawdown stress test and it still works. All I need to do now it get say 18 months buffer of my pension in to a cash account (outside SMSF) and I will feel comfortable. That will be in an offset account against a property I have (outside SMSF) so the cash is still working. Remember that a normal public Superfund will completely be exposed to the next crash … I am hoping to be on the sidelines and have the system to get me out. Hope this helps.
Hi Terry, I didn’t really have to do anything regarding sequence of returns risk as the system handled it by sending me into cash and then signalling the re-entries as the market bottomed.
I do, however, keep a couple of years cash for living in case things go pear shaped and the market doesn’t come back for a while or goes into a prolonged bear market. My expectation is that in such a period the fund would also be cashed up so one could draw down on that if required without undermining the system.
Of course I could be wrong but my view is you have to embrace risk to achieve reasonable returns so I am not really a diversification person, rather I think you should choose a process ( that has been properly tested) and then stick to it .
Jeff,
What great input for all those who read, digest and do the same exercise you have.
Brings a beaming smile to my face and a warm feeling to my heart.
The SWS team is so very committed to playing our role in what you have penned, and never for a minute do we lose sight of the importance of that role for each and every one of our members.
Regards
Gary
Hi Terry, Following on from your comment re risk tolerance low to medium. Mine is more low than medium and being in a situation where I have to live off my super and try to maintain a lifestyle I am used to, risk takes on a different dimension both theoretically and practicably than in working years. If a 5% return on asset value that is capable of producing that return to live comfortably is your aim, then that is very possible with SWS. A way to reduce your risk, if you find the volatility of a shares only portfolio hard to handle in the beginning, you could have a core position of an index ETF - say STW, of half your allocated capital. Another way is to increase the number of positions with lower equal weighting, rather than having lower number of positions with higher position sizing. Of course the sweet spot with an ASX portfolio is around 7 to 8 position sizes, but if you have $2m to invest, then even a core of $1m and position sizes in excess of $100k can be a daunting thing to contemplate at the beginning. Keep in mind, however, that smaller position sizes with greater position numbers may not keep you fully invested all of the time, however the risk is lower, as are the returns of the portfolio, but 5%+ should still be well within the realms of possibility.
This is not financial advice and others’ views may vary.
Thanks Jeff for your imput it has helped me put my situation into perspective .I will be implementing what you are saying . Also nice to know Garry is watching over us .
thank you also Wakefield . One last question to anyone ?
With a Portfolio A of 9 stocks already underway, my next hurdle is to quadruple the position size on the 9 positons .This poses questions to me ? 1 Do i add extra funds to existing positions? As some of the stocks could be finishing there run.2 Allow Portfolio A to gradually phase out on exit signals and start a new B Portfolio with the Equal weighted position sizes. Now i Know anything can happen in the market but i feel that the timming into the market with minimal pullback is not only good for the Portfolio but also important for my Psychology
Regards Terry
Hi again Terry
What I do when increasing position sizing is to await vacancies in the existing portfolio and upsize with new positions; alternatively you could start a new portfolio and let the other one expire as positions exit.
The one thing to avoid I would think ,is adding to existing positions unless the particular stock was under the action price.
Hi Terry
In my case as an example I retired when I 60years old 5 years ago.
I did go a financial planner to set up a strategy for our retirement.
I make my own decisions on investment within guidelines of our super and end of year financial stuff is done by an account.
I use Sharewealth for my share investments since Gary started his business a couple of decades ago which has helped me a great deal to achieve an earlier retirement.
At times it has been difficult follow the systems but that is human nature.
If I hadn’t met Gary years ago I would not be in the position to be financially self-sufficient.
My moto has always been “If you are on a good thing,stick to it”
Allan Langer
Allan,
Thank you for your words of endorsement. And for your custom since February 1999!
Your words are very much appreciated - and certainly not taken for granted.
Best regards
Gary
Thanks Allen
Your comments are helping to consolidate my conclusion.
Terry, back yourself and stay away from financial advisors. As mentioned previously, if you are going to lose money it’s better you do it than an advisor who is being paid by you to lose it.
I have our entire SMSF amount exposed to the USA market through Spa3 Investor and I require a 12% annual return to cover my drawdown in retirement. I am achieving this with Spa3 Investor and in fact, my total funds are greater now than they were 3 years ago. The Covid crash last year proved to me just how robust the system is. Down 10% compared to over 30% for the USA & Australian Indexes.
Good luck and have faith in SWS.
Hi I am new to SWS and using SPA 3 very happy as I started with paper portfolio’s dipping my toes in. Also doing Trader however not doing too well there as 3 stocks I picked straight down and another one up however I need more positions just playing with 50K in that portfolio so I guess will take time. Today it took a beating.
I too am daunted by large positions however I think in the SPA 3 rules you can create satellite portfolio’s.
That is what I want to do…any thoughts…Pete
Terry, I have dipped my toes, arms and legs into investing (and trading) for the past 50 or so years.
Initially I was very naive and relied on financial “EXPERTS” to guide my investments.
I started our SMSF in 1997 whist still working.
I continued to rely upon “EXPERTS” for advice and guidance and in every instance lost capital - in some instances to the tune of tens of thousands of dollars.
I eventually ditched the experts and invested in educating myself to trade and invest and have since increased our Superfund to the point where I am “happily” unable to apply for a Pension because of our accumulated wealth.
DO NOT pay others to help you lose money!!!
Exactly Brian. Could not agree more. An expert is only a drip under pressure and knows no more than you.
Thanks gents ,for your words of wisdom
I feel grateful that you have taken time to share your thoughts.
I shall keep you post on my journey
Regards Terry
Well done Terry on starting a discussion which likewise was helpful for me. I have been basically retired now for about 4 years and been a on/off SPA3 Investor for a number of years with some success but limiting my exposure to SWS to about 10% of my funds. The large bulk of the balance remains invested through a financial planner/super-pension fund which generally has performed well but as we all know has some serious costs and fees attached to this type of arrangement.
I seriously now though want to break out of this cycle and set up a SMSF investing the vast majority of my funds through SPA3 Investor (and fully following the rules!) but am also cognisant of the fact that I need more confidence in SWS and to appropriately educate myself!
On this basis, I am considering seeking a new accountant (for a few reasons) to help in setting up the SMSF and to provide ongoing support including fund administration/auditing and tax requirements.
This way I can avoid the cost of a financial planner and largely investment fund fees even if the accountant costs a bit more.
I am therefore interested to know and not sure if this an appropriate forum to do so, how others who are using SWS entirely or in part to invest are set up to deal with the process and requirements of an SMSF and investing. I have had a look at the ATO website for setting up a SMSF and what needs to be done etc but a personal perspective would I think be of a lot of assistance at this time.
Any advice would be gratefully received so I can get moving…
Gary - guess might have something to say on the golf course tomorrow!
Thank you.
Keith
Hi Keith
I’ve been using “eSuperfund” for my SMSF for about 3 years+ which costs just under $1,000 for accounting, tax return and annual audit combined (there are limitations on your choice of brokers, but it’s all well disclosed). I expect this would be hard to beat in terms of cost. Depending on how much accounting advice/guidance you might need (I haven’t really needed to ask any questions so I can’t really comment on the level that eSuperfund would provide), this is probably the cost-to-beat if you wanted a starting point. For more suburban-type accounting/tax/audit services I expect you’d be looking at 1.5K - 2.5K as a minimum total annual cost.
Cheers
Geoff