The returns which investments deliver vary from year to year and in different economic periods. Generally, shares will outperform property and both of these assets will outperform cash or fixed interest securities. This is a trend which has been identified over the past ten years. However, there are certain risks involved in share investments.
Shares

Investments in shares – known also as equities – are investments in companies. When an individual invests in shares, they become known as a shareholder.

A shareholder has some ownership in the company and its profits, and their shares can produce benefits through:

* Dividends paid when the company makes a profit
* An increase in the share price of the company, so that a profit is made when the shares are sold.

Investment features

* Generally classified as a high growth asset
* Typically earn higher investment returns over the longer term
* Experience short-term volatility based on the ups and downs of the stock market and company performance
* Best for long-term investment.

Historical performance

The graph below shows the value of $10,000 invested in Australian and international shares from June 1975 to June 2005.

Shares past performance graph

Source: JANA Investment Advisers

Expected rate of growth

High growth over the longer term. The average annual return after inflation over the 10-year period since 1996 was 12.01% for Australian shares, and 6.63% p.a for international shares. The average inflation rate during this period was 2.6%. Historically, shares are expected to have a higher growth/return over the long term than most other asset classes.

Level of risk

There is high volatility in the share market from year to year. Shareholders should be prepared to experience the highs and lows, including the possibility of negative returns in some years, to gain the higher returns that are generally produced over a longer period.

Source: JANA Investment Advisers. Figures are based on the S&P/ASX 300 for Australian shares and the MSCI World (ex. Australia) Index (unhedged) for international shares.

Self Managed Super fund (SMSF) Information

Can you hear yourself saying “Superfunds? Retirement? Those things are years away for me, right?” Time to think again. The amount of retirement funding which we have available is dependent on the actions we take now. One of the major problems with a lot of retirement funds is management fees. Fund managers and financial planners often impose a number of management and account keeping fees which eat into your retirement saving and reduce your quality of life in retirement. So how can people take control of their retirement savings and make sure people get the income they are entitled to when they retire. Self Managed Super Funds (SMSFs) provide an answer to this question. So what are they and how do they work? How can I set one up?

What is a self managed super fund?

Briefly, a super fund is short for ‘superannuation fund’ which is a set of shares, monies or property which is designed to provide support to a person during their retirement years. The legal requirements which set out a super fund have less than 5 members and each person in the fund is responsible for the operation of the trust. No person is an employee of another member of the fund unless those members are related. This is a quick dot point summary of the characteristics of a self-managed super fund:

• Has less than 5 members;
• Each individual trustee of the fund is a fund member;
• Each member of the fund is a trustee;
• No member of the fund is an employee of another member of the fund, unless those members are related;
• The trustee can be a corporate entity;
• No trustee of the fund receives remuneration for his or her services as a trustee; and
• A SMSF is registered with, reports to and is regulated by the Australian Taxation Office

How does an SMSF work?

A Self Managed super fund is like any other superfund except for the fact that it is managed by its members. The members put aside a portion of their income derived from working each year in order to fund their retirement. This money is invested usually in shares or property assets or possibly in fixed interest securities. These are financial assets which produce an income that a person can live off during retirement. Each different SMSF will have a different investment strategy according to the investors needs for income, capital growth or a combination of both.

In most cases, the trustees of an SMSF are required to prepare and implement an investment strategy for the superannuation fund. The strategy must reflect the purpose and circumstances of the fund and take into account:
• How to maximise member returns while having regard to the risk;
• Appropriate diversification in a long term investment strategy; and
• The ability of the fund to pay benefits as members reach retirement, and other costs incurred by the superannuation fund.
Trustees must make sure all investment decisions are made in accordance with the documented investment strategy of the fund.
What are my roles and responsibilities as a trustee?
The Australian Taxation Office Produces an excellent document outlining the roles and responsibilities of trustees of self-managed super funds. But briefly, as a trustee, you have responsibilities of:

• Lodging an annual income tax return and superannuation fund annual return
• lodging Superannuation member contributions statements
• appointing an approved auditor to complete the annual audit
• maintaining records for up to ten years, and complying with investment requirements.
• Some of the key restrictions under the SIS Act include: meeting the sole purpose test
• not accessing your money without meeting a specific condition of release
• not providing loans or financial assistance to members or relatives, and
• not borrowing money to invest.

There are four key steps to setting up an Australian Self Managed Super Fund:

1) Establish a Trust
The first thing you need to do is prepare a trust deed. For this you should talk to your accountant, solicitor or a legal service company. Be mindful that while your accountant or solicitor may be able to help you establish the SMSF, they cannot advise you on whether it is the right financial decision for you unless they hold an Australian financial services licence. The trust deed sets out such matters as the details of the trustees, how they are appointed, their powers and the conditions for contributions and benefit payments. You must make sure the trust deed is dated and properly executed. All SMSFs must have trustees and in turn all members of the fund must be appointed trustees. Anybody aged over 18 can be a trustee as long as they have not been convicted for an offence involving dishonesty or are undischarged bankrupts. As a trustee, you are legally responsible for the actions of the fund. Your responsibilities include filing an annual tax return, lodging member contributions statements and appointing an approved auditor to complete the annual audit. The next step is to elect to be regulated by the Superannuation Industry (Supervision) Act (SISA) in order to receive concessional tax treatment.

As trustees, you have 60 days to lodge your election with the Tax Office. You do this by completing an application form to register for the new tax system superannuation entity. This can either be done online at the Australian Business Register or by contacting the Small Business information line on 13 28 66.

2) Elect to be a regulated fund, obtain a tax file number and an Australian business number
On submitting the form above, you will be issued with a tax file number and an Australian business number. Once you have elected to be regulated, then the decision cannot be reversed without winding up the fund.

3) Prepare an investment strategy
Preparing an investment strategy is the next step. This involves formulating a strategy that takes into account risk, return, diversification, liquidity, cash flow, asset allocation and the ability to discharge existing and prospective liabilities. It is here that you may need the help of a licensed financial adviser to steer you in the right direction.

4) Open a bank account
The account must be opened in the name of the fund to keep your superannuation fund assets separate from your personal assets.

There you go! You have set up your very own Self Manager Superannuation fund, so what are you waiting for?

74% of Australians don’t realize you could be severely reducing your quality of life in retirement in your retirement by not finding their lost super. You may have worked for many different employers in a life time, and your retirement savings could be spread over any number of different super funds which all charge management fees on your hard earned savings. This can severely reduce your quality of life in retirement and impair your ability to remain independent of your friends and family or social security. The Australian Tax Office estimates that there is over $9.7 billion in unclaimed superannuation in Australia. Super often gets lost when people change jobs or move houses or change names and they don’t notify their superfund of the change, but when you move your super into one account, you will pay just one set of fees and charges for management of the fund and greatly simplify the management of the funds increasing your access to funds and quality of life in your retirement.

So how can I find out if I have lost super?

The Australian Government keeps a register of superannuation accounts where the owner is unknown. The register includes details of lost members superannuation funds, approved deposit funds, eligible rollover funds and retirement savings account providers. You may be listed on the register if your super provider has been unable to contact you because they don’t have you address or your mail has been returned. If your super provider has not received contributions from you or rollover amounts for you in the past five years, then you may also be on the register. Also, if your account was transferred to your fund from another super provider that reported you as a lost member, then you will have been placed on the government’s register.

How does the government determine the status of ‘unclaimed super’?

According to the law and Australian government policy, an amount payable to a member of a fund is taken to be unclaimed super if:

• The member has reached the eligibility age (currently 65); and
• The superannuation provider has not received an amount in respect of the member (and in the case of a defined benefits superannuation scheme, no benefit has accrued in respect of the member) for at least 2 years; and
• After the end of a period of 5 years since the superannuation provider last had contact with the member, the provider has been unable to contact the member again after making reasonable efforts.

An amount payable in respect of a member of a fund is also taken to be unclaimed super if:

• The member has died; and
• The superannuation provider determines that, under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member; and
• The superannuation provider has not received an amount in respect of the member (and, in the case of a defined benefits superannuation scheme, no benefit has accrued in respect of the member) for at least 2 years; and

All superannuation fund providers are required to make reasonable efforts to find the beneficiary of unclaimed super and after a reasonable period has passed, if the superannuation provider is unable to ensure that the benefit is received by the person who is entitled to receive the benefit then the money is held by the public trustee until a rightful owner is identified.

How do I find my lost super?

The ‘Super Seeker’ on the Australian Taxation Office website can help you track down your lost super. ‘Superseeker’ searches the Lost Members Register and other Tax Office records to find possible matches for your lost super. You will need to provide your name, date of birth and tax file number. It is relatively easy to find out if you have lost superannuation. The ‘Superseeker’ tool can be accessed can be accessed using the Super Seeker website, just by taking these simple steps, all you need to do is take these simple steps:

1. Go to the Australian Taxation Office ‘Superseeker’ website at:
2. Enter your details and follow the steps on the site.
3. If you have lost super, print off the form, sign it, date it and return it to the super fund manager of the account where you want to have your super fund consolidated to.

You can also access your lost superannuation by calling 13 28 65 within Australia and following the telephone prompts. Alternatively, you can access it by downloading the ‘Searching for lost super form’ (NAT 2476), completing it and mailing it to the address stated on the form. The ‘Superseeker’ tool is free and available for access 24 hours per day, seven days a week.

So I found my lost Super, what next?

If ‘Superseeker’ finds a possible match, it will provide you with the name and contact details of the super provider that may have your lost super. This allows you to contact the fund and give them the contact details to talk about what to do with your lost super. If you wish to transfer the whole balance of you lost superannuation account you can use the portability form found at this website:

Request to transfer whole balance of superannuation benefits between funds.

If it turns out that the amount of super available to you is less than $200, you may be able to remove it tax free, an ever greater bonus!

How can I keep track of my super?

Even if you have no lost super, it is a good idea to make sure that you don’t lose any of the super which you are entitled to or become exposed to a number of management fees which will reduce your retirement savings drastically. If you give your super fund or Retirement Savings Provider your tax file number, it is much easier to keep track of your super. You can check whether your fund has your Tax File Number by looking at your member statement. If your Tax File Number is not listed on your statement, contact your fund. If your fund does not have your Tax file Number:

• Your super may be taxed an additional 31.5%
• Tour fund won’t be able to accept personal contributions from you, and
• You may miss out on any super co-contributions you may be eligible for.

What are you waiting for?

Its time to get your super into order. You could be missing out on thousands of dollars in retirement savings all because of a few simple administrative issues. Take the steps to find your lost super and get your current super accounts in order.

Justin Grey has emailed us at Find Lost Super and is looking to track down a fund he put money into a while ago before he joined the military fund. He wants to find this fund and then consolidate it into his new super fund.

Justin sent us his details and we started with a government search for lost superannuation. Unfortunately this search only brought up his current military fund as he was recently discharged from the military. Justin remembered that years ago he had some tied up with CBUS.

We decided to do an AusFund search instead and look for an industry fund he might have some funds with. We received a successful search although Justin now needs to call them up to enquire further and get the details of the required fund.

We will keep you updated as to the progress.

Editor: We found Justins Lost Super!! See below for Justins email to me:

“Dear Fred

Thank you very much Findlostsuper had my Money (Super) there waiting. It was only a small amount but ever little bit helps to build that end figure. Finally i can amalgomate my 2 super funds into one. I have just recieved the paperwork to collect My super so now just have to go through the formalities to get it changed over. Once again Thank You

Justin grey "

"DUPLICATE, unwanted or simply lost superannuation accounts are costing the industry and its members some $315 million annually to run, research released today shows.", Industry bemoands super 'deadweight' | NEWS.com.au Business

There are over 28 million accounts in Australia News.com.au says. Thats a huge amount of money just floating around with no home. I hate that feeling of not having my money under my control. The worst thing is the feeling of just losing that money the money that you have earnt.

"A boutique funds manager is reducing its management fees to zero in an attempt to capture investors flocking to take advantage of new superannuation rules.

Perennial Investment Partners Ltd announced on Wednesday that it would not collect management fees on 24 selected trusts for all of August, September and October - but only for new funds invested between May 30 and July 31.", IOOF subsidiary scraps management fees

Wow, what an aggressive move considering the big 30th of June is coming! New rules flagged by the federal government in its 2006 budget allow investors to make an undeductable contribution to their super of up to $1 million by June 30.