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Disclaimer completeness of information which is contained in this - - PowerPoint PPT Presentation

May 02, 2023 240 likes •602 views

This presentation has been prepared by Nucleus Wealth and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The

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Disclaimer

This presentation has been prepared by Nucleus Wealth and is for general information only. Every effort has been made to ensure that it is accurate, however it is not intended to be a complete description of the matters described. The presentation has been prepared without taking into account any personal

  • bjectives, financial situation or needs. It does not contain and is not to be

taken as containing any securities advice or securities recommendation. Furthermore, it is not intended that it be relied on by recipients for the purpose of making investment decisions and is not a replacement of the requirement for individual research or professional tax advice. Nucleus Wealth does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this presentation. Except insofar as liability under any statute cannot be excluded, Nucleus Wealth and its directors, employees and consultants do not accept any liability for any error or omission in this presentation or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise noted, Nucleus Wealth is the source of all charts; and all performance figures are calculated using exit to exit prices and assume reinvestment of income, take into account all fees and charges but exclude the entry fee. It is important to note that past performance is not a reliable indicator of future performance. This document was accompanied by an oral presentation, and is not a complete record of the discussion held. No part of this presentation should be used elsewhere without prior consent from the author.

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Agenda

  • Some highlights from the Australian SMSF

Landscape

  • 2 major mistakes SMSF trustees make in

asset allocation

  • Some key ways to avoid making these

mistakes

  • Key considerations before taking the

plunge into an SMSF

Tim Fuller Damien Klassen

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

The number of SMSFs increased to 584,802 The number of SMSF members is 1,129,542 The estimated value of SMSF assets is $749 billion The top five asset types held by SMSFs by value are

  • cash and term deposits 37% (up from 23% in 2017)
  • listed shares 26% (down from 30% in 2017)
  • real property 9% (Flat)
  • Trusts 11% (Flat)
  • other managed investments 5%.

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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The Australian SMSF Landscape

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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1st Mistake –

Doing Nothing!

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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2nd Mistake

Only sticking with what you know

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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A concerning trend with lower balance SMSFs

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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2nd Mistake

Only sticking with what you know

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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2nd Mistake

Only sticking with what you know

Tim Fuller Damien Klassen

Source ATO SMSF Statistical Report – March 2019

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A Conservative Trend

Tim Fuller Damien Klassen

Source – Cuffelinks / Graham Hand

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Invest in what you know

Tim Fuller Damien Klassen

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Invest in what you know

Tim Fuller Damien Klassen

  • 1. This is stock picking advice not asset

allocation advice

  • 2. These are books about how to find

stocks that you are going to take big bets on

  • 3. Asset Allocation is about diversifying
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Fighting your

  • wn biases

Tim Fuller Damien Klassen

  • 1. Confirmation Bias
  • 2. Optimism Bias
  • 3. Loss Aversion
  • 4. Self-Serving Bias
  • 5. Planning Fallacy
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Fighting your

  • wn biases

Tim Fuller Damien Klassen

  • 6. Choice Paralysis
  • 7. Herding
  • 8. Stories vs Analysis
  • 9. Recency Bias

10.Bias Blind Spot

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Bad Timing

  • 1. Average Retail investor

underperforms by around 2% p.a.

  • 2. Most of the gap is due to bad timing –

selling low, buying high

  • 3. It’s a natural tendency that you need

to fight against – have a plan and stick to it

Tim Fuller Damien Klassen

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Bad Timing

Reducing the opportunity set

Tim Fuller Damien Klassen

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Diversification

Typical Australian Portfolio

  • 1. Residential Home
  • 2. Investment property
  • 3. Bank Shares
  • 4. Hybrids
  • 5. Corporate Bond ETF

Tim Fuller Damien Klassen

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Diversification

Typical Australian SMSF 5 different exposures to the Australian Housing Market

Tim Fuller Damien Klassen

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Diversification

Australian Banks

Tim Fuller Damien Klassen

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Diversification

Hybrids

  • Not an institutional asset
  • All the upside of debt, most of the

downside of equity

  • Largest exposures in sector to banks

Tim Fuller Damien Klassen

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Diversification

Tim Fuller Damien Klassen

Russell Investments Australian Select Corporate Bond ETF

Source: Russell Investments

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Diversification

Tim Fuller Damien Klassen

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Diversification

Tim Fuller Damien Klassen

Name Ticker VB VNQ VEU VWO SHY TLT TIP DBC GLD Vanguard Total Stock Market ETF VTI 0.91 0.43 0.75 0.58

  • 0.24
  • 0.24

0.06 0.29

  • 0.1

Vanguard Small-Cap ETF VB 0.4 0.63 0.47

  • 0.25
  • 0.28

0.02 0.29

  • 0.08

Vanguard REIT ETF VNQ 0.38 0.38 0.36 0.57 0.55

  • 0.15

0.13 Vanguard FTSE All-Wld ex-US ETF VEU 0.87

  • 0.09

0.35 0.4 0.05 Vanguard FTSE Emerging Markets ETF VWO 0.14 0.03 0.44 0.42 0.17 iShares 1-3 Year Treasury Bond ETF SHY 0.68 0.66

  • 0.05

0.5 iShares 20+ Year Treasury Bond ETF TLT 0.72

  • 0.37

0.44 iShares TIPS Bond ETF TIP 0.05 0.55 PowerShares DB Commodity ETF DBC 0.28

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Final Notes

Tim Fuller Damien Klassen

SMSFs are a great solution if you want full control.

  • Ability to combine assets with spouse and

family

  • Much broader investment palette available
  • Real property with limited borrowing
  • Higher levels of control
  • More flexibility in retirement
  • Can be cheaper than Master Trusts with higher

balances

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Final Notes

Tim Fuller Damien Klassen

SMSFs are a great solution if you want full control.

  • You need to ensure that you have the time

to spend on the management of the fund, for your own sake!

  • Complex tax affairs can combine well with

SMSF’s providing you have a good accountant / adviser.

  • With complete control, comes complete

responsibility!

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Final Notes

Tim Fuller Damien Klassen

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Nucleus Wealth is now on Spotify, iTunes and podcasts!

Bit.ly/NucleusInsights Give us a like, 5 stars and write a review!

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