I'm pretty surprised when you automatically receive super that the super fund is allowed to invest in the stock market.

Can the stock market still take a massive crash like it did around 2008, I thought after that there were changes made to the stock market to stop this from happening. Does any know much about this subject ???

You can choose what they invest in. Read the documentation - high, medium and low risk strategies are available at a minimum. Low risk generally means relatively safe interest rate instruments that provide you with an annuity. Read the fine print. Risk is good. But it depends where you are in your life - age and financial health - what other assets you have and how big they are. Given the language you have used I would suggest you do some homework and go see someone who can advise you wisely. Super - although I prefer to self manage - is something that helps the majority of people. Get on board and make the most of it. You will be grateful for it later in life. Do not put all of your eggs in the one basket.

Re the market - have a look at history - 2008 was a big event - there have been many more over history. If you are 25 now it might prove to be just a bump in the road - if you are 65 and about to enter retirement then you should have the majority of your super investments in other instruments that are not as exposed to the equity markets. You need to go and get some advice.

Thanks ted, I fully understand the investment options offered by my super fund no probs, the question I have would be more - could or can the world wide stock markets still take a massive crash and potentially wipe out a a portion of everybody's super ?

Yes that is always going to be a risk. But its a balance of probabilities. Think of oil - its terribile right now if you had all your money in oil and gas stocks - but as a commuter you are benefiting big time. In Nov I was paying $48 to fill my car up - yesterday at $1.019 it cost me $32. There will always be winners and losers. Most super funds will take a balanced portfolio approach - some sectors will cost you money in a slump but others do well - essentially called defensive stocks / strategies. Choose your super fund wisely. Look at the returns that are generated - not just over 1 year but 3, 5 and 7yrs and make a call. Not all equity markets will crash at the same time or for the same reasons. Think back a few years to Cyclone Larry - ruined banana crops in Innisfail in 2006 - they produce approx. 90% of all bananas for Australia. The producers in Coffs Harbour won big time as prices went form $2 a kg to $16 (peaked at approx. $26). So whilst there is a degree of risk that your super fund equity investments might lose 25% in one year - its fair to say that if that was to happen other markets would be going the other way and the balanced approach would limit your loses (or it might even benefit you). The reason for this is that there is still a lot of money that needs to find a home. If the world is negative equity markets they will hunt yield. Price and yield have an inverse relationship. So as demand for govt bonds etc increase - prices go up and interest rates go down, then the reserve banks drop rates, further driving the price of bonds higher. Do not be losing sleep over this - there are lots of strategies to reduce your risk if this is your main concern. I guess what I am trying to say is that your superfund is highly unlikely to have all of its eggs in one basket - eg Australian stocks or Media stocks. They will be taking a semi-balanced approach at a bare minimum. A lot of them though are crap - you would be better off just buying the index and keeping your transaction costs at a minimum as that is essentially all they do. Do your homework.

Yes ! You can limit your exposure through aggressive, moderate, cash options. This is now done automatically due to changes made by the government directly relating to your age.

What bothers me about super is sooooo many people have no idear what their fund is doing and people with an interest in making money for themselves are managing it. Also look at your default insurance. Your employers contribution might only cover the insurance default

the real problem is the number of index hugging funds run my union types taking your money and adding ZERO value

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Ted the Kiwi said..
Yes that is always going to be a risk. But its a balance of probabilities. Think of oil - its terribile right now if you had all your money in oil and gas stocks - but as a commuter you are benefiting big time. In Nov I was paying $48 to fill my car up - yesterday at $1.019 it cost me $32. There will always be winners and losers. Most super funds will take a balanced portfolio approach - some sectors will cost you money in a slump but others do well - essentially called defensive stocks / strategies. Choose your super fund wisely. Look at the returns that are generated - not just over 1 year but 3, 5 and 7yrs and make a call. Not all equity markets will crash at the same time or for the same reasons. Think back a few years to Cyclone Larry - ruined banana crops in Innisfail in 2006 - they produce approx. 90% of all bananas for Australia. The producers in Coffs Harbour won big time as prices went form $2 a kg to $16 (peaked at approx. $26). So whilst there is a degree of risk that your super fund equity investments might lose 25% in one year - its fair to say that if that was to happen other markets would be going the other way and the balanced approach would limit your loses (or it might even benefit you). The reason for this is that there is still a lot of money that needs to find a home. If the world is negative equity markets they will hunt yield. Price and yield have an inverse relationship. So as demand for govt bonds etc increase - prices go up and interest rates go down, then the reserve banks drop rates, further driving the price of bonds higher. Do not be losing sleep over this - there are lots of strategies to reduce your risk if this is your main concern. I guess what I am trying to say is that your superfund is highly unlikely to have all of its eggs in one basket - eg Australian stocks or Media stocks. They will be taking a semi-balanced approach at a bare minimum. A lot of them though are crap - you would be better off just buying the index and keeping your transaction costs at a minimum as that is essentially all they do. Do your homework.

The plunge in fuel for average Joe and Jill is good. Like most things, there are two sides to a story. The main reason fuels, and oil, are so cheap is because the major oil producing nations in the Middle East are trying to out-muscle the "Johny come lately" in the USA. These smaller oil producers are extracting oil from shale rocks. It is a high cost operation, but there is plenty of it in the ground. Apparently, just in the USA, there is as much, if not more, of it than the Middle East combined

The Middle East nations are not happy about it in terms of political and financial aspects. Less dependent on them means the West will not pay as much attention to them as in the past. Financially, the shale oil industry will cut into their share. So what they are doing now is to suffocate the shale oil production by flooding the market. Lower oil price will make the higher cost shale oil companies suffer.

These high cost shale oil companies are viable because the oil price is high. As soon as it dips below a certain level, they are almost running at a loss. No big deal one may say. However, looking at the big picture, these small shale oil companies borrowed money to start. If they can't service the loans, then the banks will take a hit, just like the housing fore-closures during the 2007-2009. I believe a lot of money had been borrowed to start such "adventure". The oil rush just may be another dream turned into a nightmare, just like the "DOT COM" and the "housing loans" bubbles.

Doing homework won't help those of us that simply don't understand how the money world works Ted.
Some of the terms you used have absolutely no meaning for me.
Try as I might, I just cant understand it. All I know is earn it and spend it.
I have government super which is all in conservative investment, which is safe for a bloke that will retire within a couple of years, but that is the limit of my understanding.
Other than that, when the Aussie dollar drops buy houses. When it goes up buy cars.
I believe that the majority of people would be similarly ignorant/confused.

Regards.
Jim.

Ted the kiwi and Jupiter send me a pm with financial advise for a self employed 24 year old as all I seem to be doing is "wasting" my money on surf holidays motorbikes and my 4wd adventures !! Ps the shale oil thing sounds very worrying!

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ok said..
Ted the kiwi and Jupiter send me a pm with financial advise for a self employed 24 year old as all I seem to be doing is "wasting" my money on surf holidays motorbikes and my 4wd adventures !! Ps the shale oil thing sounds very worrying!

Don't bother with the advice. At 24, you're already doing the right thing.
But don't do it all your life.

I wouldn't say there is a risk of it happening again, it is 100% certain to happen several times in a life time.

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Little Jon said..
I wouldn't say there is a risk of it happening again, it is 100% certain to happen several times in a life time.

As sure as the sun will rise tomorrow

And what most seem to have trouble with is understanding that the money doesnt vanish into thin air it changes hands.

That is out of yours and into theirs that know how, and when.

Back in the day when money was in its infancy if a society that were using cowrie shells as currency was faced with the phenomenon where the cowrie shells became suddenly very plentiful because someone had found a massive supply of them and they no longer had value the cowries would simply be replaced by another item which did have value.

In our society, because we are largely ignorant about the whole money system and the fact that it has been corrupted beyond the pale, the supply manufacture and supply of modern day cowrie shells has become a monopoly industry of its own which is designed to benefit the owners by enabling them to control the price of our labour by controlling the supply of the medium by which we value our labor.

They've got a cowrie shell factory with infinite capacity and they set their own value. It is done to benefit the bankers and no one else.


"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits."

Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain.

If you average it out the local share market has gone up 1.8% every 3 months for the last 30 years. what you should be looking at is a mix of investments in your super you want cash shares and property but while your young (under 40) go with a higher risk/reward fund and as you get older start moving to a more moderate fund then see a financial adviser as you move toward retirement