Living the ING Life

Hey Scott,

Long time reader, first time asker! I would love your thoughts on ING's latest superannuation offering — ‘Living Super’.

Stephanie

Hi Stephanie,

Not much.

It’s kind of like walking into your local pub and choosing between the 35 craft beers they have on tap.

They all have flashy logos and pompous names, but they all taste pretty much the same. Yes, ING allows you to buy individual shares, but industry funds offer the same thing.

And, while their portfolios are made up of sensible index funds, they’re really not that cheap.

(When you’re buying index funds, cost is one of the major factors.)

Bottom line: there are cheaper, and better, products out there in my opinion.

Case in point: arguably the best fund manager in the world is the not-for-profit Vanguard, and they’ll be coming out with their own super offering later in the year.

Hold my beer!

Scott

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

My Super Crappy Boss

Hi Scott,

I feel like everybody learns to check their super the hard way — by not being paid it at some point thanks to a super crappy boss. I am a 22-year-old uni student and have mostly had hospitality jobs while studying. I have in fact done two years of hard work with no super, thanks to the slimy owner of one of those neon-coloured hole-in-the-wall doughnut shops (that Instagram is so obsessed with).

I contacted the ATO, I contacted the Fair Work Ombudsman, and I even maintained contact with the boss himself after I rage-quit. In the end I lost my time as well as my money. The company just ‘phoenixed’ (went bankrupt, started a new company, then ‘bought’ the restaurant from the old company free of super debt). Scott, after you have got banks out of schools, the next thing you should throw your weight behind is stronger punishments for super theft.

Kelly

Hi Kelly,

Since last week’s column, I’ve been inundated by people telling me similar stories to yours, and a lot of them are young people working in hospitality. It seems there really are a lot of crappy bosses out there.

To add some salt to your doughnut, I should point out that you didn’t just lose two grand. From age 22, with compounding over your lifetime, that money would have grown into tens of thousands of dollars!

And that’s why this theft — and that’s what it is — needs to be stamped out.

I also don’t understand why the Government is offering a no-questions-asked amnesty on bosses who haven’t paid super. I guess some employees might receive a bit of what they’re owed, but I reckon it sends the wrong message.

The people I feel for — apart from you, of course — are the honest business owners who are doing the right thing, paying their staff the correct wages and super, yet are competing with the likes of George Calombaris. Now that’s a doughnut.

Scott

All My Eggs in One Basket

Hi Barefoot,

Following your recent post about expensive super funds, I had an appointment with a financial advisor at First State Super, where my fund is held. After doing a ‘risk report’ on me, the advisor suggested I essentially ‘put all my eggs in one basket’ by investing 100% in high growth. I am in my mid-thirties with a hubby and three kids under five. My question to you is: would you put all your eggs in one basket?

Emma

Hi Emma,

I actually think this is good advice.

I’ve said the same thing in my book: young people should be in high-growth super offerings.

I took a look at First State’s High Growth Option, and it has:

• 30% invested in Aussie shares (think CommBank, CSL, Woolies and a couple of hundred other companies)

• 37% invested in international shares (think Facebook, Apple, Nike and over a thousand other companies)

• 30% invested in unlisted assets (like the Sydney Convention Centre and various hospitals and other large projects)

• 3% in cash.

So, while it’s true that you’re investing in growth assets, it’s not like you’re putting all your eggs in one investment.

Emma, you have at least 30 years before you can access your super — that’s more than enough time to ride out the temporary dips of the share market. In fact, the biggest risk you face is not having your money in high-growth investments at all.

Scott

Don’t Go Changing

Hi Scott,

In last Sunday’s column there was a paragraph that read “Scarface Claw is in this instance OnePath/ANZ ... who have some of the worst performing Super Funds”. I have to say this scared the hell out of me as I have just done a transition to retirement with this specific fund you mentioned. I am 65 now and am topping up my Super with some of my pay other than the work contribution. Should I be concerned, or ride it out?

Wendy

Hi Wendy,

Your email reminds me of a friend of mine who married an ocker knockabout Aussie bloke who spends his free time sitting on the couch, drinking beer, and watching sport. She’s still holding out that one day she’ll arrive home from work and he’ll be watching the Bachelor, and drinking a bottle of Kombucha. It ain’t going to happen.

Similarly, ANZ/OnePath have consistently topped the FatCat Fund list of having the worst performing funds. Every year, for the last seven years! According to StockSpot, who compile the data on funds, they control almost a third of the worst 40 performing funds.

Faced with this dubious award, year after year, you’d think that ANZ would have woken up to themselves, and stopped picking the pockets of their customers with high fees. They haven’t.

Scott

A Hairy Problem

Hi Scott,

Your latest column about Hairy Maclary and expensive super funds really put the cat among the pigeons in our house. Our financial adviser (who we like) has us with AMP (among a slew of other retirement-related accounts), and we are finding it hard to see through all the smoke and mirrors to get to the fees so we can feel secure. Can you suggest a few questions that are polite but will still get us to the information we need?

Chris

Hi Chris,

Would you let your plumber charge you an extra $1,000 to fit a tap simply because he asked after your grandkids?

Of course you wouldn’t!

Yet the fact that you’re having to “see through all the smoke and mirrors to get to the fees” tells me that you need to get out the planner plunger … your thinking is blocked!If I were in your situation, I’d write him the following email:

Dear (advisor’s name)

I was reading the newspaper the other day and I was shocked to read that the majority of funds underperform the averages each year. That made me think that I should contact you and ask how all my funds are going. So can you please do the following three things for me:

1. Print us a statement that clearly shows my annual percentage return since we began, net of fees.

2. Benchmark our return against the relevant accumulation index for the same period.

3. Provide me with an itemised list of fees (expressed in both dollars and percentages). Include any and all ongoing fees, commissions and administrative costs that I’m charged.

After we have this information, it would be great to sit down and discuss it all.

Chris

I’m sure you’ll find his reply surprising, especially to question two. My view is that the best way to boost your investment returns is by lowering your costs. If your advisor is working in your best interests, he’ll agree with you. The only reason the conversation will be awkward is if he’s not!

Scott

Boost My Super Just By Shopping? SuperSuper!

Hi Scott,

I am hearing a lot of advertising for SuperSuper ‒ a shopping rewards program that pays rewards directly to your super account with GuildSuper. It’s targeting women, enabling us to boost our super balances by doing nothing different ‒ we are shopping anyway! What are you thoughts on this?

Louise

Hi Louise

I actually heard SuperSuper advertised on the radio, and my first thought was:

“Well, this sounds like the financial equivalent of a Spice Girls song.”

Girl Power! Yeah! We can shop and save for our super!

So I’ll tell you what I want, what I really, really want.I want a super fund that doesn’t zig-a-zig-ah: GuildSuper has underperformed an average super fund over 1, 3, 5, 7, and 10 years, according to Superratings. I assume this is because their fees are a little, shall we say, Scary Spice. At 1.38% per annum plus $95 a year.

Bottom line? Any money you save from their slick shopping campaign, you’ll give back in higher fees and lower returns (and then some).

So, if you want to be my (super) lover, you’ve got to get with my plan.By all means score rewards from shopping, but you don’t need GuildSuper to do it (though hats off to GuildSuper for making it super … simple).

All you need to do is Google “Woolworths discount cards” and you can get 5% off your shopping. (Tightarse tip: most retailers offer these discounts if you buy their gift cards or e-vouchers … because they bank on a certain percentage of people losing the cards or forgetting about them, and they’ll pocket the money.)

Then, take your savings and make a contribution into an ultra-low-cost index super fund.

Spice up your life!

Scott