This week's Productivity Commission Draft Report is unlikely to affect the retirement savings of the vast majority of Cuffelinks' readers. It addresses default super for those who do not choose a fund, usually at the start of their working life. With the third stage of the Report not commencing before 1 July 2017, it will be years before changes are implemented.
There's no such thing as a typical investor, but a common lifetime pattern goes like this: after education, find a job, save seriouslyg, buy a home, begin paying off the mortgage, invest in other property, buy bank shares, invest in index funds, put extra cash into bank hybrids. It looks like a good asset allocation in a diversified portfolio, but it's mostly the same risk: residential property. The latest minutes of the Reserve Bank Board say increases in investor loans, "... suggest that there had been a build-up of risks associated with the housing market." Everyone should know their exposure to this sector and the banks, especially since the Big 4 comprise 27% of the S&P/ASX200 Index.
Investors are always looking for an edge, an extra piece of information not closely watched by others. Chris Stott shares one of his early warning tips.
The new super rules are forcing thousands of people to review their retirement plans, and Julie Steed warns there are also insurance and estate planning consequences. Still on the new rules, defined benefit super arrangements remain extremely common although rarely offered to new employees, and Melanie Dunn explains how such plans will be treated under the new transfer balance cap.
New research on SMSF investments shows a significant disconnect between what SMSF trustees expect from their portfolio and the assets they actually own. Trustees are in for a rude shock.
The concept of duration may sounds arcane, but Jarod Dawson shows why it's important to know the duration of a fixed interest portfolio to understand the exposure to interest rate rises.
It's usually not worth large super funds investing in microcaps because these tiny companies cannot 'move the needle'. This leaves the field open for other investors, but Steven Vaughan and Sriram Srinivas argue for a better way to pay performance fees on microcap funds.
Graham Hand, Managing Editor
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