Like many Australian approaching retirement age, I have started to move other assets into an industry super fund. The tax free lure dangles like the golden ring on a merry-go-round. The only hitch is that it really is a merry-go-round, and my ticket only gives me a limited number of rides. Like the old farmers hit by floods in northern NSW, or the Nigerians who have lost all in the riots, options for starting again tend to close in on all of us.
Do I dare take the still warm egg from the soft nest of super?
Having made the leap last August to put all my super into the ‘socially responsible category’, I have now seen it diminish in value these last six months. They keep explaining that the high growth means high risk, but as the most conservative (timid really) of investors, I foolishly thought socially responsible would mean low risk.
In any case, ALL the categories (even cash) for my super fund seem to have been negative this last little while. And while they may eventually recover, I am also aware that the whole sub-prime mess is now spreading to the banking sector. And by the time things bounce back, I may well have lost so much that the losses can’t easily be recovered. My ticket on the merry-go-round has a time limit, as actuaries know.
Several friends have their money with trusted financial advisors, and claim that they are now not paying tax and that their funds are increasing in value. But that makes me nervous too. Isn’t that what my big industry fund should be doing, saving my money and investing it so it grows? I’ve yet to meet a financial advisor I feel really confident about. At least you can see and try a used car, and assess the dealer accordingly. And what’s wrong with paying some tax? It’s like giving to charity and hoping they do something smart with it. Sort of.
So I’m taking another leap, counter-intuitive or perhaps just stupid: At the age of 60, instead of drawing down that glittering tax free allocated pension, I’m taking my money out of super and putting it into the only investment that I’ve done well out of. You guessed it: real estate.
It would be nice to branch out into something like commercial real estate, but I’ll probably just plod along with housing. Perhaps in a country town that is growning slowly, and where it is possible to get a 3000m2 block.
Being almost as concerned about food securityAdrienne Langman, the author of ‘Choosing Eden’, is just part of the story. The other part is that I enjoy designing places to live in, and learning how to do it more sustainably. My neighbors were so moved by her book that they are now rethinking their retirement. A small acreage in Tassie is looking good to them, with an extended family to move things along.
But back to the money markets and the hard yakka of protecting meagre assets acquired over several decades of working life. No one, regardless of their position on the wealth spectrum, wants to go backwards as they retreat from paid employment.
If the banks are marching towards greater securitisation, and money is going to become harder to come by, that must mean more expensive money. But how that will impact on housing at a time when immigration and internal population proceeds without check is another matter.
Could Australia experience a fall in house prices? If so, where and how hard? And how does one hedge the bet?
Any views more informed than mine (that’s just about all of you) are welcome.