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High growth, or balaned fund

 
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Old 16-01-2008, 08:44 PM   #1
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High growth, or balaned fund

Hi my Super fund is in high growth at the moment and losing money quickly. Should I leave it in high growth and wait out, or change to balanced.
I am 9 years fm retirement.
Thanks
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Old 17-01-2008, 06:51 AM   #2
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Hi Chris,

How long til you reach age 55?

Cheers,

Dan
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Old 17-01-2008, 07:08 PM   #3
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Hi Chris,

How long til you reach age 55?

Cheers,

Dan
Hi Dan, it is 41/2 years before I reach 55. This was going to be my original retirement/stop full time work age, but now I may have to work longer to recover the losses.
I told my financial planner I will now have to work for 9 more years, but isn't this classed as a long enough term to leave it in high growth, to recover and in 3-5 years time go to a more stable balanced fund??
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Old 17-01-2008, 08:34 PM   #4
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Hi Chris,

You've got another 35 years of investing (on average life expectancy for a male).

Where do you think the share and property markets will be in 35 years time?

Cheers,

Dan

PS While past performance is no guarantee of future returns the All Ordinaries started in January 1980 based on 500, today the 17th January 2008 closed at 5850.

PSS Speak to your FPA registered Financial Planner before making an investment decision.
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Old 17-01-2008, 09:32 PM   #5
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Hi Chris,

You've got another 35 years of investing (on average life expectancy for a male).

Where do you think the share and property markets will be in 35 years time?

Cheers,

Dan

PS While past performance is no guarantee of future returns the All Ordinaries started in January 1980 based on 500, today the 17th January 2008 closed at 5850.

PSS Speak to your FPA registered Financial Planner before making an investment decision.
Thanks Dan. I have really panicked the last few weeks, as I have lost $10K for 4 weeks now. I saw my FP the other day and lost control of myself and blamed them for changing me to high growth. He made me do one of those silly questionnaires to see what type of investor I am. Of course I can't sleep at night when I lose money, but I am trying to get over it and focus on the long term. He then suggested I should be in the balanced - but if I have a long time frame, why not high growth. He would not answer me when I said "tell me why I should continue using you, when my other industry fund which is balanced has performed better for the last 4-5 years" He said you must compare apples with apples, my aguement was, no the bottom line is, who is making me more money you the FP or my industry fund Super.
Also, to switch it will take 3 weeks for the paper work to go through, and yet with the industry fund, I do it over the internet and switches happen every Wednesday.
I will be making a few more phone calls tomorrow and once the dust settles find a new FP, draw out my money and do a 50/50 split with an FP that I feel more comfortable with and my current industry fund.
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Old 17-01-2008, 10:00 PM   #6
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you lost <only> $10k? lol.. don't mean to be rude, but there are people who are losing ALOT more than you here.

Sharemarkets don't go up in a straight line.

If your happy with industry super funds who only return 5-6% PA, then stick with them.. if your hoping for a better longer term result, stick with high growth which will mean higher volatility.

Your view on such fund should be 5 years plus, so to look at it weekly and say 'I'm losing money each week' is stupid. Your not losing anything until you sell. Do you re-value your house each week? So why do it with shares.

I very much doubt stock price will be the same or less than today than in 5 years time.

To blame your financial planner for problems in the US is also not necessary.. No one can predict the future. However he would have placed you in the correct fund for the time frame you have before retirement.
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Old 17-01-2008, 10:04 PM   #7
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I will be making a few more phone calls tomorrow and once the dust settles find a new FP, draw out my money and do a 50/50 split with an FP that I feel more comfortable with and my current industry fund.
May I kindly suggest that you take a step back and assess the situation carefully before you go selling your existing investments right now ?

The markets are down a lot - and they may go down further still in the short term, but unless selling now is part of your strategy (or a necessity), I wouldn't be rushing to realise losses at this point - give it a couple of months.

Definitely discuss this all with your (new?) advisor before you make any decisions ... and most importantly - ask them "why" they recommend the things they do. Perhaps run their ideas by us (if you are comfortable doing so) for a second opinion before making any decisions (although at the end of the day you have to trust your advisor - not us!).

Just about everything on the markets is down right now ... there are very few funds (other than cash) which are not showing losses over the past 3 months ... so it's not as though only your investments are doing badly (although some may be doing worse than others).
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This is a general comment only and does not constitute advice. Before making financial decisions you should seek advice from a professional adviser, who can take into account your specific circumstances and investment goals.

Last edited by Sim; 18-01-2008 at 10:32 PM.
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Old 18-01-2008, 12:01 PM   #8
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As long as your not in pension phase - what's the problem!
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Old 18-01-2008, 07:47 PM   #9
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Hi Chris,

I'm not quite sure how much $10k is in your whole situation, percentages are better to use.

One of my client's was freaking out that she had lost 2.2%, another client was cool as a cucumber and he had lost 10%. The main difference was that he understood that the markets will go back up (at some stage).

I am amazed that your planner changes you to high growth and then afterwards does a risk profile questionnaire with you...What does your earlier Statement of Advice say?

If you really want to compare your Industry Fund ring them up after the end of January and ask them what their January Interim Crediting Rate is. Industry funds are notorious for using "smoothing" techniques. They'll also never call you to change funds or do other things. Your also paying for Capital Gains Tax by using an Industry Fund as it is built-in to the crediting rates, if your in a wrap account you can move the funds across and sell in pension phase for no CGT liability.

It sounds like your adviser is a little unsure about why you should continue to use their services. Maybe, this is because they are unexperienced and cannot verbally justify how they add value. While I'm just shy of 30, since 19 I've been working in stockbroking/financial planning, also I've done courses tilted towards Applied Finance not just a Dip in FS (FP). Your adviser may while being a reasonable age, eg, 50 they may have not been in finance before hence struggle with articulating how they add value to your situation.

I don't know who your FP works for but 3 weeks? WTF? I do it online and client's have the funds the next day...

I am so intrigued to find out who your FP works for...(then maybe laugh and then shake my head)...

I don't think any fund managers are making money at the moment, remember that Industry Funds use the same fund managers (Investment managers - AustralianSuper as an example), lawyers, accountant, custodians, stockbrokers, etc, and all the professionals want to get paid (just like financial planners).

I'd say, even better if he is in pension phase as income from fully franked shares is fully rebated! Woohoo

Chris, no Investment/Fund Manager is making money for clients at the moment, everybody is feeling the pain in some way. Ie, super or investments outside of super.

Like Sim said, look at the full picture.

Cheers,

Dan

PS Before making an investment decision speak to an FPA registered Financial Planner.
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Old 18-01-2008, 09:08 PM   #10
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Hi Chris,

I'm not quite sure how much $10k is in your whole situation, percentages are better to use.

One of my client's was freaking out that she had lost 2.2%, another client was cool as a cucumber and he had lost 10%. The main difference was that he understood that the markets will go back up (at some stage).

I am amazed that your planner changes you to high growth and then afterwards does a risk profile questionnaire with you...What does your earlier Statement of Advice say?

If you really want to compare your Industry Fund ring them up after the end of January and ask them what their January Interim Crediting Rate is. Industry funds are notorious for using "smoothing" techniques. They'll also never call you to change funds or do other things. Your also paying for Capital Gains Tax by using an Industry Fund as it is built-in to the crediting rates, if your in a wrap account you can move the funds across and sell in pension phase for no CGT liability.

It sounds like your adviser is a little unsure about why you should continue to use their services. Maybe, this is because they are unexperienced and cannot verbally justify how they add value. While I'm just shy of 30, since 19 I've been working in stockbroking/financial planning, also I've done courses tilted towards Applied Finance not just a Dip in FS (FP). Your adviser may while being a reasonable age, eg, 50 they may have not been in finance before hence struggle with articulating how they add value to your situation.

I don't know who your FP works for but 3 weeks? WTF? I do it online and client's have the funds the next day...

I am so intrigued to find out who your FP works for...(then maybe laugh and then shake my head)...

I don't think any fund managers are making money at the moment, remember that Industry Funds use the same fund managers (Investment managers - AustralianSuper as an example), lawyers, accountant, custodians, stockbrokers, etc, and all the professionals want to get paid (just like financial planners).

I'd say, even better if he is in pension phase as income from fully franked shares is fully rebated! Woohoo

Chris, no Investment/Fund Manager is making money for clients at the moment, everybody is feeling the pain in some way. Ie, super or investments outside of super.

Like Sim said, look at the full picture.

Cheers,

Dan

PS Before making an investment decision speak to an FPA registered Financial Planner.
Thanks everyone for your input. Just to get the figures right, my typing errors - it has been losing $10K per week for the last 4-5 weeks i.e a total of $50,000. It has dropped from $297k to $255, I don't know how to work out the percentage about 17% isn't it? Today I rang and spoke with the original advisor who changed my portfolio to high growth last year. He explained his reasons why etc and explained the market to me, it made great sense to me at the time, I would not know how to repeat what he said though, but I am now more happy and will just hold on and wait out for it to correct and smile at my long term growht. The FP I spoke to today, was very nice and did explain that the other new FP I had probably did not know how to explain it to me.
I then was very nice and rang the other FP back and explained that I now understood it more and I was quite happy to continue in the high growth.

I should assume there are a lot more clients like me out there that don't know much about shares/Super etc, but the FP should know how to deal with an aggressive female client, ie calm me down, explain it all in easy terms and assist me to understand the markets so I then will feel more confident to inject more money. Yesterday I was going to take out my personal contributions and buy another property.
Dan - my other industry Super is Australian Super, and for the last 3-4 years they have always performed about 2-3% better in their balanced fund.
Also the FP really did not know how to speak to me, and gave me that stupid questionnaire, I told him it was crap and I wanted him to convince me why I should stay with him. If FPs want to use the questionnaire, by all means do and if it comes up that the client is a conversative investor, try and explain to the client all about the market and how if they did take more risk they would make more money, lose more money, but long term they will be Ok than hiding in their term deposits. I even asked him to recommend a simple book for me to read to understand it, and he said go on the ASX site. I am sick of looking at sites. I want to buy a decent book to go the sleep with it and dream of making money in the share market now.
Again, thanks Dan, I will try and PM you to tell you the name of the financial svcs I currently use.
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