How I run my SmSF - t My SMSFHe expertS tell all€¦ · also manages his own SMSF, and explains...

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My SMSFHow I run my SmSF - tHe expertS tell all

contentS

peter Hogan 06

Peter Hogan has had a long history in the SMSF space and was also on the SMSF Professionals Association of Australia board for a decade. Here’s what he does in his own fund.

BarrIe DunStan 11

A long history of writing about superannuation led this financial journalist to start up his own SMSF. He explains his asset allocation and some of his favourite stocks.

peter BurgeSS 07

Peter Burgess is head of policy and technical at AMP SMSF. He originally established a small APRA fund (SAF) due to limits on his time, but is now in the process of converting his SAF into an SMSF.

Joanne StuHmcke12

Joanne Stuhmcke has been managing her family’s SMSF for the past five years and is finally happy with its performance. She explains her strategy and approach here.

olIvIa long 04

In our most revealing ‘My SMSF’ yet, this super guru explains why she started up her SMSF with just $50,000 and how she more than quadrupled that sum in just six years.

anDrea Slattery 10

Andrea Slattery has been spearheading the push for better professionalism among SMSF advisers for a decade now, and has had her own SMSF for 14 years.

paul rIckarD 03

Paul Rickard was the founding CEO and managing director of CommSec and chairman until 2009. He started up his SMSF just sixyears ago and hasn’t looked back.

SanDy morgan 09

He used to play cricket for Queensland and has had an SMSF for over a decade because he likes investing. Sandy Morgan shared some of his super secrets in a very frank discussion.

maureen JorDan 02

If you’ve always wanted to know how the Switzer SMSF invests, here’s your chance.

noel wHIttaker08

Noel Whittaker writes weekly financial columns in publications across the country, has written 20 books and is the recipient of many investment awards. He also manages his own SMSF, and explains his strategy here.

Brought to you by www.switzersuperreport.com.au

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Each fortnight, the Switzer Super Report asks SMSF professionals, and some subscribers, what they do with their personal SMSFs. Here is a collection of ten of our favourite SMSF articles. Some of the contributors are very revealing and their habits may surprise you, but you will definitely learn something from each one. Switzer

Super Report experts Peter Switzer and wife Maureen Jordan, as well as Paul Rickard, are also included in this exclusive eBook.

Maureen Jordan is Group Publisher of RUSSH Magazine and CEO of Switzer Media & Publishing. She is on numerous boards and judging committees.

Peter is an award-winning broadcaster, twice runner up for the Best Current Affairs Commentator award for radio, behind broadcaster Alan Jones. A former lecturer in economics at the University of NSW he currently hosts his own TV show, Switzer, on SKY News Business Channel.

maureen JorDan anD peter SwItZer

If you’ve always wanted to know how the Switzer SMSF invests, here’s your chance.


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completed according to the rules. As a group, we love the investing side, because we understand the companies and other assets we invest in, and so all we needed to do was to create an efficient system to make sure all the I’s were dotted and the T’s were crossed. It adds to costs, but they are tax deductible inside the fund, and it means we can concentrate on making money for the fund.

Are you glad you have it?Definitely, as it has meant that we have bought great companies we like when share prices were low and conventional fund managers might have played it cautiously as they are publicly accountable. From early 2009, Peter was publicly advising that stocks would make a comeback and so we put our money where Peter’s mouth was, so to speak!

Are you pleased with its performance?The performance has been solid with our returns beating the index on a 1, 3 and 5-year basis. That’s not surprising, as we have had a ‘buy the dips’ strategy.

What is your asset allocation?Since 2009 we have been fully invested in stocks, as we have a high-risk profile and we don’t intend to retire for some time. We were invested in Aussie stocks as we did not want to have a currency hedge issue and we like to invest in great companies selling at attractive prices, which also offer good dividends and franking credits. We keep cash of course for when buying opportunities arise.

What are your favourite investments/stocks and why?We play stocks through our SMSF but have three investment properties we have held for some time outside of our SMSF. And of course we have our family home. They have all been great investments, once again bought in great areas where there is good capital gain and they were bought quite a few years ago during challenging times for the real estate market.

What investments do you have outside of superannuation?We were always big fans of property, as the answer above shows, but as we became more mature we started to recognise the value of investing in great companies, which pay solid dividends. We still like property at the right price and the next one will probably be bought inside our SMSF. We’ve also built up a number of businesses with a considerable workforce. One of these is Switzer Financial Services, and Paul (Rickard) is our partner in this business. These businesses have substantial value but have required a lot of investment of owners’ capital to get them to where they are today. That said, we have great delight in investing in our family and staff and seeing great returns!

Do you use an advisor or any kind of service provider?Yes – three! Peter, my son Marty and myself as well are all advisers.

Age:Forever young (I’m a Baby Boomer).

Other members of your SMSF:My husband, Peter (Switzer) and our two sons.

How long have you had your SMSF?We started it about 12 years ago when our sons joined us in our business.

Why did you start it up?We were unhappy with the charges and the performance of retail super funds, and we could see enormous advantages in being in control of our investments. Clearly, super is a very tax-effective way to gain exposure to the stock market, and an SMSF gave us an opportunity to give us the asset mix in our portfolio that suited both our appetite for risk and what we prefer to invest in to build wealth. We were also intending to offer the same solutions for the right clients who came to our financial planning business. And we thought it was a great way to get our two sons more involved in a critically important wealth generation issue all young people need to be engaged with.

How big is it?It is a significant amount of money designed to give my husband and I sufficient cash drawings when we eventually decide to retire, which is some time off at this stage. From the point of view of our sons, the SMSF will be a fantastic vehicle for them when they retire and as parents it is very comforting to know that there will be a wonderful legacy left for your children of which they have also had a part in building.

Is it more or less difficult to manage than you thought it would be?

Given our background in the finance industry, we were aware of the obligations – especially administrative ones – and so we put in place a system that ensures the necessary work is

Paul Rickard has more than 25 years experience in financial services and banking, including 20 years with the Commonwealth Bank Group in senior leadership roles. He was the founding CEO and managing director of CommSec, which he established in 1995 and led until 2002, and then he was chairman untill 2009. Paul was named Australian ‘Stockbroker of the Year – Hall of Fame’ in 2005 and is currently the chief investment officer of the Switzer Financial Group.

paul rIckarDPaul Rickard was the founding CEO and managing director of CommSec and chairman until 2009. He

started up his SMSF just six years ago and hasn’t looked back.


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Are you pleased with its performance?Yes, I’m very happy with the performance.

What is your asset allocation?• Australianequities55%• Cash,termdeposits,hybrids:35%• Property:8%• Internationalequities2%

I would like a higher allocation to international equities, however I didn’t listen to my own advice and invest more when the AUD was around $1.05 USD.

On the fixed interest side, I am a mega bear on long bonds – so all our exposure is through floating rate hybrid issues that re-price every 90 days.

With our equities portfolio, it looks a little like the Switzer Income Oriented Portfolio. We have about 25 stocks, with a sectorallocationasfollows:

What are your favourite investments/stocks and why?There are two absolute standouts – Commonwealth Bank and Age:

55.Other members of the SMSF:

Partner Fiona, and two of my adult children.Unfortunately, as you can’t have five members, my oldest daughter is not a member – she is in a government scheme and is reasonably well provided for.

My younger children joined a couple of years ago. They are university students, who work part time – and I got sick of seeing their contributions eaten away by fees and insurance premiums. This is one of the great scams of the default industry super fund regime (thanks, Bill Shorten) – that people without dependants are forced to invest their super in life insurance.

How long have you had your SMSF?While I have always been really interested in this area, I didn’t start my SMSF until six years ago when I left the Commonwealth Bank. The bank’s sponsored super scheme was well run, had good investment options and was particularly cost effective – so there wasn’t a lot to be gained in having my own SMSF.

Why did you start it up?Leaving the bank gave me the opportunity to really think about super – and triggered me to take some action.

How big is it?About $1.5 million.


No – although it does take some time.Do you enjoy managing it?

Yes - although there is a fair bit of administration.

Ramsay Health Care. CBA – floated at $5.40 in 1991 and the dividend has increased from $0.40 to circa $3.50 per share. With Ramsay, have a look at the share price graph over the last 10 years – phenomenal. CSL is not too bad, either.

What investments do you have outside of superannuation?Shares (very overweight CBA), plus an investment property. I haven’t brought the shares into the super fund yet because of the capital gains tax – obviously, I will look to do this at some stage.

Do you use an advisor or any kind of service provider?Idoitallmyself–includingtheaccounting.Iaminthe1%oftrustees who don’t use an accountant or administrator – and I don’t recommend this to others.

I do it because it helps keeps me in touch with the issues that accountants face in working with their clients. I use specialist SMSF software from BGL (which many accounting firms also use), with its double entry “debits and credits”. I create an accounting file and send this to my auditor (the only external provider).

Of course, I also leverage the ideas and advice from all the expert contributors to the Switzer Super Report. Even if I disagree with an expert on a particular point, that is helpful as it encourages me to re-examine and confirm any actions or decisions I have made. As an investor, I think this is a really good discipline.

olIvIa longIn our most revealing ‘My SMSF’ yet, this super guru explains why she started up her SMSF with just $50,000

and how she more than quadrupled that sum in just six years.


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Age:38.

Other members of your SMSF:I initially set up my SMSF with my mum as I was single and happy to avoid corporate trustee fees. I have subsequently added my husband Mark as a trustee and removed my mum.

How long have you had your SMSF?Eight years.

Why did you start it up?At just over 30, my balance was just under $50,000, but as a part owner of SuperGuardian my administration was free so I thought why not give it a try. Running my own fund has certainly given me far greater appreciation of the SMSF trustee experience.

How big is it?My fund is now valued at over $275,000. My husband has decided to keep his superannuation benefits with his corporate super fund (despite the fact I’m getting far better results and keep telling him so).


From an administrative perspective, it’s easy; I do very little which is great, as I hate paperwork. I do struggle with finding time to sit down and consider investments but finding the time is well worth it. Initially, I established my portfolio with a stockbroker but when a few shares turned sour I decided to DIY.

Are you glad you have it?Absolutely. Despite starting with a small balance, I have significantly out-performed any other superannuation vehicle in such a short space of time.

Are you pleased with its performance?Ilostnearly2%inthefirstyearofoperationduetoacoupleoffailed companies recommended by my stockbroker. To date, myportfolioisup42%oncost.

What is your asset allocation?Cash-32%Internationalequities-38%XeroLtd(NZ)ListedSecurities-30%BHPBillitonLtd,CSLLtd,DuluxGroupLtd,ResmedIncChessDepositaryInterests10:1,SantosLtd,Westpac Banking CorporationShares that have brought the portfolio downIncitec Pivot Ltd, MEO and Orica Ltd.

What are your favourite investments/stocks and why?I’ll be honest – I’m a mad investor. I have a significant amount of time left until retirement so I can afford to be more aggressive with my strategy. The most exciting addition to my portfolio has tobeXeroLtd–listedontheNewZealandstockexchange.Sometimes you just have to know a product and follow

OliviaLongisafounderandexecutivedirectorofXpressSuper.SheiscurrentlyCEOofSuperGuardianPtyLtd,XpressSuperandPortfolioGuardian.Shehashadmorethan18yearsexperience in the financial services industry, predominantly in management roles, and joined SuperGuardian in 2004. She studied a Bachelor of Communication (Marketing) and various courses with the Financial Services Institute of Australia. She is an active member of SPAA - The SMSF Professionals’ Association Australia, a member of the Australian Institute of Company Directors and has over 10 years experience in self managed superannuation.

“SometimeS you juSt have to know a product and follow your hunch”

yourhunch.Xerohaslaunchedmarketleadingcloud-basedaccounting software and I liked it. It was revolutionary, user friendly and I thought blew the competition out of the water. Having built up the cash in my fund during the GFC, I had a large amount ready to invest and I decided to invest a significant amountinXero.Definitelyahigh-riskmanoeuvre,butonethathaspaidoffasthestockwasupsome292%oncostinAugust.However, having said that, my portfolio is now at a level that I need to take it more seriously. I have recently engaged the services of a professional portfolio manager to help me tidy it up. Although I’m happy to take a ‘punt’ with some of it, I really don’t have the time to monitor investment performance that I probably need.

What investments do you have outside of superannuation?You could say I have a love affair with property. I purchased my first home at age 20 and my first investment property leveraging off that at 22. I then acquired a second investment property at age 24, and have subsequently acquired other properties.

I have shares in SuperGuardian, and use term deposits to maximise cash reserves.

Do you use an advisor or any kind of service provider?Having experienced the fall-out from some of the shares recommended to me by my adviser, I have appointed a Private Portfolio Manager (O’Kane Investment Services) who has a proven track record of outperforming the market to manage part of my portfolio.

I’m using their Absolute Portfolio, which is the most aggressive portfolio and consists of quality stocks, value stocks and cash/income securities only when quality and value opportunities cannot be identified.

The objective of these portfolios is capital growth and income and having no set allocation to cash/income securities.Thebenchmarkportfoliohas100%exposure to stocks.

What I like about private portfolio management is the transparency of the results to date.

SuperGuardian administers my SMSF, handling all of the administration, providing me daily online reporting to all aspects of my SMSF.

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peter HoganPeter Hogan has had a long history in the SMSF space and was also on the SMSF Professionals Association

of Australia board for a decade. Here’s what he does in his own fund.


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Day-to-day management is OK as keeping it fairly simple – no direct property exposure and so on.We also use an external administrator to prepare accounts, returns annually – this requires a good deal of work to present the information about the activities of the fund for the year in a way that is needed – transactions undertaken through the year are stored electronically as they are undertaken.

Do you enjoy managing it?Managing the fund is just part of the process of having a fund – the enjoyable part is making investment decisions with a long-term view in mind and hopefully seeing steady results – we are not active traders in the SMSF.

What is your asset allocation?The decision we have made as trustees is to be invested as much as possible – predominantly in direct Australian equities with a smaller percentage of international equities through managed funds. Exposure to property is also through property trusts, rather than direct property, but also a smaller percentage of the SMSF. Cash holdings are built up to ensure we can meet expenses as they fall due, but also to provide a cash reserve for opportunities that may come up from time to time – but usually kept to a minimum.

What are your favourite stocks and why?The focus of our stock selection is moving slowly towards yield stocks with dividends that are also fully franked the closer I get to retirement. While not concerned with the equity exposure, we want to maximise the cashflow generated by that investment where appropriate. We are mindful that there is a need to carry a little more cash in pension phase to meet those additional income stream payment obligations whenever that happens.

What investments do you have outside of superannuation?Investments outside superannuation are predominantly for shorter-term financial goals – cash for anything within 12 months.

Do you use an advisor or any kind of service provider?Linda is a financial planner and so discussions around what should be done with the fund are regular, especially if there is a build up of cash.Contribution caps are maximised as much as is possible and are paid into the SMSF. Super built up elsewhere also provides for insurance cover as part of group life policy at competitive, affordable rates.

Name of fund: Manyana Superannuation Fund.

Trustees: Peter and Linda Hogan.

How long have you had the fund?Have had the fund around 14 years.

Why did you start it up?We felt we had enough to commit to an SMSF that we could control – leaving substantial amounts in managed super accounts where investment decisions were not being made by us but by the fund managers. The amount in our SMSF is primarily for direct equity exposure and cash where we make the decisions.

peter BurgeSSPeter Burgess is head of policy and technical at AMP SMSF. He originally established a small APRA fund

(SAF) due to limits on his time, but is now in the process of converting his SAF into an SMSF.


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Yes, we enjoy being able to engage directly with our investment adviser. We also enjoy the investment transparency of having our own fund. We know exactly where our super is invested at all times.

Are you pleased with its performance?Overall, yes. Given our growth investment strategy, and our relative over exposure to speculative stocks, our fund performed poorly during the GFC but has recovered reasonably well over the past few years.

Can you give us some numbers around performance over the last one, three and five years?

It has pretty much been in line with the performance of the All Ords index over those periods.

What is your asset allocation?Currently,around60%ofourfundisinvestedinlistedAustralianequities,10%ininternationalshares,30%incashand fixed income.

What investments do you have outside of superannuation?A few investment properties.

Do you use an advisor or any kind of service provider?Investment adviser/stockbroker.

Age:49.

Other members of the SMSF: My wife.

How long have you had your SMSF?My wife and I established a small APRA fund (SAF) in 2005 and we are currently in the process of converting the fund to an SMSF and appointing Cavendish as the administration manager.

Why did you start it up?We wanted to invest in a broader range of listed and unlisted investments including some smaller cap stocks, which are not typically available in other funds. We also wanted to feel more in touch with our super and be able to engage directly with our investment adviser. We opted for a SAF as we were time poor but wanted a structure that could provide SMSF-like features without the need to take on the role of a super fund trustee.For cost reasons, as well as now having more time on our hands to manage the fund, we are now converting our fund to an SMSF.

How big is it?Around $300,000.


I would say less difficult.Do you enjoy managing it?

Peter Burgess is head of Policy & Technical at AMP SMSF where he is responsible for AMP’s SMSF policy development and interpreting SMSF legislation to inform AMP’s advice strategies and technical support materials.

Prior to joining AMP, Peter was the national technical director for the SMSF Professionals’ Association of Australia (SPAA) and a previous SPAA board member. He is an adjunct lecturer with the University of Adelaide and is a widely published author on SMSFs.

noel wHIttakerNoel Whittaker writes weekly financial columns in publications across the country, has written 20 books and is the recipient of many investment awards. He also manages his own SMSF, and explains his strategy below.


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invested in Australian equities and the international side is run by top-flight managers.

What is your asset allocation?It’saboutcash5%,fixedinterestlikehybrids10%,directpropertythroughpropertysyndicates10%,alternativeinvestments5%andthebalancespreadevenlybetweenAustralian equities and international equities.

What are your favourite investments/stocks and why?My best stock pick has been Magellan global funds - I bought 55,000 at one dollar each and now they are over $20 each! What investments do you have outside of superannuation?My own home and some investment properties and cash in the bank.

Do you use an advisor or any kind of service provider?To keep up to date for all the columns I write, I spend at least an hour every day talking to fund managers and economists. However, I also use the Praemium Choice platform to keep track of all the transactions. I couldn’t do without them.

over 65.Other members of the SMSF:

Only my wife.How long have you had your SMSF?

About 25 years.Why did you start it up?

It enabled me to invest in assets, which were not available through a normal retail fund.

How big is it?It is substantial.


It’s extremely easy to manage because all the administration work is done by Superannuation Services Pty LTD, which charge about $5,000 a year for their services. I am appalled at the fees some of my friends are paying to their accountants. Figures of $10,000 a year to $15,000 a year are often quoted to me.

Are you pleased with its performance?I’m extremely pleased with the performance - it is highly

Noel Whittaker has written 20 financial books that have sold over two million copies around theworld.In1988,Noelwasnamed Australian Investment Planner of the Year. In 2003, he was awarded the Australian Centenary Medal in recognition of his services to the financial services industry and, in 2011 he was made a Member of the Order of Australia in the Australia Day Honours List.

Noel is a Fellow of CPA Australia, a Fellow of the Taxation Institute, and a Fellow of the Australian Institute of Management.

He is a Certified Financial Planner, a member of the Australian Securities and Investment Commission Liaison committee, and is currently an Adjunct Professor and Executive in Residence with the Faculty of Business at the Queensland University of Technology.

Age:

“i bought [magellan] at one dollar each and now they are over $20 each!”

Age:70.

Members:Wife and two children.

How long have you had your SMSF?

Since about 1996.Why did you start it up?

I’ve held shares since 1965. I’m not afraid of investing and I thought ‘Why should I seek outside advice?’ Like people enjoy gardening, I enjoy investing. It’s always been a big interest in my life and then when compulsory superannuation came in, it was a chance for me to see what I could do for myself.

How big is it?Just under $1 million. I’m in pension mode so I’m pulling down a bit now.

Is it more or less difficult to

SanDy morganHe used to play cricket for Queensland and has had an SMSF for over a decade because he likes investing.

Sandy Morgan shared some of his super secrets in a very frank discussion.


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and family. My father basically blew all his pension so I guess it’s hereditary. We’re here for a good time, not a long time, so you may as well do the things you enjoy.

Do you use an advisor or any kind of service provider?I’m now in the process of using SuperIQ. Unfortunately my financial adviser is myself. It’s probably not the best thing to do, but it’s my life and I can do what I like.

What investments do you have outside of superannuation?Equity in the house.

manage than you thought it would be?No it’s not difficult. I’ve always been involved in shares. It’s just another investment portfolio. I quite like it and I understand it. If I need any information I know where I can find it. To get my information together to do my annual accounts it probably takes eight hours.

How has it performed?In line with the market. But I’ve also got a few private equity investments.

What is your asset allocation?Thebulkofitisshares,20%privateequityand15%propertytrusts. I’ll invest in some equities where the volatility is quite low so they basically take on a quasi fixed interest role. There is not really much in cash as I work on the theory that shares are liquid so if I need money, I can sell a few shares.

What are your favourite investments/stocks and why?I basically buy the top 100. Every now and again I’ll skate out and have a go at a microcap. I keep telling myself don’t do it, but because I’ve done it all my life, I keep going for the next five bagger. They don’t turn up too often. You’ve got to dream a bit so you may as well dream with your SMSF. But micro-capswouldbeunder15%.

What are your long-term plans for the fund?Frankly I’m not into to leaving a sh*tload of money to friends

“we’re here for a good time, not a long time, So

you may aS well do the thingS you enjoy.”

anDrea SlatteryAndrea Slattery has been spearheading the push for better professionalism among SMSF advisers for a

decade now, and has had her own SMSF for 14 years.


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Age:56.

Other members of your SMSF:One (husband).

How long have you had your SMSF?14 years.

Why did you start it up?My husband and I chose to set it up to ensure we were self sufficient in retirement. My husband was self-employed and I had been working in this area for many years. We were in a position where we could work together to build our superannuation nest egg.


No, easier.Are you glad you have it?

Definitely.What are your views on asset allocation?

I am loath to be prescriptive about how SMSF trustees should do their asset allocation. It depends on so many factors, such as income, investments held outside the fund, age, etc, that to think one size fits all is simply wrong. What I would encourage all trustees to do is to get the best possible professional advice so that their asset allocation best meets their individual needs.

What investments do you have outside of superannuation?None.

Do you use an advisor or any kind of service provider?I have always used professional advisors from the outset. This includes auditing, accounting, legal and financial planning, as well as getting advice on insurance and property investment. My advisors are SPAA SMSF Specialist Advisors.

How long have you been involved with SPAA?I was one of the founding board members of SPAA and then became its first chief executive officer in 2003.

Why did you want to become involved with SPAA?I began working in this area as an accountant more than 20 years ago. I have always believed that SMSFs were an excellent way for some individuals to ensure they were self sufficient in retirement. SMSFs have a legitimate place with other sectors of superannuation and have been in existence since the early 1940s, but there was a perception that the SMSF sector was significantly non-compliant. We decided to set up SPAA to build a profession, assist all stakeholders in understanding the sector, to encourage proficiency in advice and to develop a level of professionalism and integrity across the industry. The degree to which we have succeeded was evident in the glowing report that Jeremy Cooper handed down in 2010, when it said that the SMSF sector was functioning well.

Andrea is the chief executive officer of the SMSF Professionals’ Association of Australia Limited (SPAA).

She has worked in the financial services industry for over 23 years and graduated from the University of South Australia with a Bachelor of Commerce (Accounting). She has attained her Masters in Commerce, SPAA SMSF Specialist Advisor™, CPA and CPA-FPS designations. Andrea is a fellow of the Australian Institute of Company Directors (FAICD).

Andrea is on the University of Adelaide’s International Centre for Financial Services Board and was the first woman to be appointed to the South Australian Cricket Association (SACA) Board of Directors and to the AFL/AFLPA Ladder Board of Directors.

BarrIe DunStanA long history of writing about superannuation led this financial journalist to start up his own SMSF. He explains

his asset allocation and some of his favourite stocks.


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Over the past seven years, the fund’s earnings have kept ahead ofpensionpayouts,earningjustover8%compoundperannumwithonlytwo,smallnegativeyearsin2007-08and2008-09.Itnow stands at more than $1 million.

What is your asset allocation?After a lifetime progressing from a stock market speculator to an investor, my basic approach uses a firm, strategic asset allocation, along with a sometimes-eclectic stock selection. The GFCconfirmedmysafetyfirststance–Icurrentlyhave60%insharesandhybridsand40%fixedinterestandcash.Thiskeeps me from sudden rushes of blood when the share market starts firing up. The cash/fixed interest is half in a bank cash management account and half in bank term deposits of a year orless.About20%oftheportfolioincludeslistedhybrids(mainlybanks) and a few listed notes and debentures.Theportfolioisalmostalllocal,withonlyasmall,3.5%,

allocationinanS&P500ETF(up33%sinceitwasboughtinearly 2012). I’m cautious about the potential exchange rate volatility in overseas shares.

I’m also low on property exposure, with only a token holding in the SPDR property index ETF. I regard our exposure to residential property through the family home and an investment property (totallingabout50%ofallfamilyassets)asenoughrealestatefora moderately adventurous asset allocation. I’m suspicious of the current hype about property, after a lifetime among stock market spruikers.

What are your favourite investments/stocks and why?Within the equity portfolio, I’ve been happy with the relatively safe growth from infrastructure stocks – mainly Transurban (a favourite with its inflation-linked toll revenue) and some gas pipelines. I was annoyed to have another favourite, Australian Infrastructure, taken over and I’m eyeing Sydney Airport to get infrastructure backtoabout10%oftheportfolio.Thesearchforyieldmeansthebigbankshavea40%

weightingandTelstraanother8.5%.Despiteacontinuingliking for Telstra, I’m loathe to lift its weighting further. The othermainstayisacombined10%holdingofWesfarmersandWoolworths. The oldest holding is Coca-Cola Amatil, at an average cost of less than half current prices.BHPandWoodside(8%oftheportfolio)arethemajor

exposure to resources. I quit Rio Tinto (at a nice profit) in 2009 in a premature hedging against the China iron ore boom. This risk averseness is quite a change for a young speculator, who held Oil Search shares at less than 50c in the late 1950s!

Do you use an advisor or any kind of service provider?For all the administration, I rely on, and trust, an accountant whose firm has administered the SMSF since inception, while I act as the chief investment officer. For more than a decade, I’ve used a small, private client broker where I have a good personal relationship. Apart from routine dealings, we meet half-yearly for talks on strategy.

SMSF members:Myself and my wife.

How long have you had your SMSF?My SMSF goes back more than two decades (when they weren’t so much in fashion).

Why did you start it up?It was a logical progression for an investment journalist with a specialinterestinsuperannuation.Twoothermotives:mywife(the only other member) had retired from nursing before acquiring any super savings and I planned for the subsequent opportunity to transition seamlessly from the accumulation to pension phase.


It has been easy to manage. Now 77 and fully retired from day-to-day journalism, I’ve got plenty of time to devote to fine-tuning the SMSF and other family investments (listed shares and an investment flat). With both fund members drawing pensions, I aim at least to earn more than enough to cover the minimum pension drawdowns.

Are you pleased with its performance?

Joanne StuHmckeJoanne Stuhmcke has been managing her family’s SMSF for the past five years and is finally happy with its

performance. She explains her strategy and approach below.


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have been much better if I had trusted myself more and taken the position size my plan allowed for.

What are your favourite investments/stocks and why?As much as I don’t like the accounting associated with listed trusts, my favourite investment has to be APA - it has performedsowell.MyotherfavouriteisGEM,G8Education-I like its growth prospects and the chart looks great. Hopefully this market correction will allow me to buy some more.Investmentsoutsideofsuperannuation:Rentalproperties,family trust holding Australian shares, portfolio of shares in personal names.

Do you use an advisor or any kind of service provider?No, I don’t use an advisor as I have had some ‘expensive’ experiences with financial advisors in the past. I work for a local accountant, in fact I do all the practices’ SMSF accounting work, so I do all my own accounts so the only service I use is an auditor.

SMSF members:My husband and I are members of the SMSF, we have two adult children who are not members.

How long have you had your SMSF?Since 2007.

Why did you start it up?We started the SMSF because we wanted to have more control over what our super money was invested in. I did some administration work for a financial advisor and learned how to set up an SMSF and what was involved in running one, which gave me the confidence to start out on my own.

How big is it?Not big enough! Most of our wealth is in equity and in property outside super. I have a staged strategy of selling property and contributing the proceeds to super over a period of five years leading up to retirement, which will get the super fund balance to a level where we can provide for our retirement comfortably.


It is easy to manage as long as you are aware of the responsibilities that you have as a trustee. With just a little bit of effort you can meet them easily and we don’t have anything too tricky – no borrowing or property within our SMSF – so it is fairly straightforward.

Are you glad you have it?Yes, very glad that we have the SMSF. I know exactly where the money is invested and how it is performing at any time.

Are you pleased with its performance?I wasn’t pleased with the performance over the first couple of years. Because it was our ‘retirement money’ I tended to treat it differently to our other investments and I made mistakes. Over the last two years though, performance has improved. The return is still not as high as the returns I get within the family trust but I am happy with the improvement. Over the lastthreeyearstheaveragereturnhasbeen12.4%.

What is your asset allocation?Ourintentionistohave90%investedingrowthassetsandjust10%incash,butatthemomenttheSMSFisonly70%invested-54%inAustralianShares,13%inAustralianlistedpropertytrustsand3%inaninternationalmanagedfund(which has always performed hopelessly and which we never shouldhavebought!).Theremainderisallocated6%infixedinterestand24%cash–wearejustwaitingforsomebuyingopportunities to buy companies at value prices.My Australian shares are well diversified across a mix of sectors, including some great performing utility and infrastructure stocks and a couple of stocks in the consumer discretionary sector. I did have a couple of banks but I took profits on those just recently, and I’m still holding Wesfarmers (WES) preference shares and Woolworths as well as a couple of smaller growth focused mid-cap stocks. I have been too cautious, though, with my position size. My returns would

“we Started the SmSf becauSe we wanted to have more

control over what our Super money waS inveSted in.”

TheEndwww.switzersuperreport.com.au

Level 4, 10 Spring Street Sydney NSW 2000 | 02 9327 8622 | www.switzersuperreport.com.au

How I run my SmSF - t My SMSFHe expertS tell all€¦ · also manages his own SMSF, and explains...

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Transcript of How I run my SmSF - t My SMSFHe expertS tell all€¦ · also manages his own SMSF, and explains...