My SMSF – Switzer Super Report expert Paul Rickard

Co-founder of the Switzer Report
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Age: 53

Other members of the SMSF: Partner Fiona, and two of my adult children.

Unfortunately, as you can’t have five members, my oldest daughter is not a member – she is in a government scheme and is reasonably well provided for.

My younger children joined last year. They are university students, who work part time – and I got sick of seeing their contributions eaten away by fees and insurance premiums. This is one of the great scams of the default industry super fund regime (thanks, Bill Shorten) – that people without dependants are forced to invest their super in life insurance.

How long have you had your SMSF?

While I have always been really interested in this area, I didn’t start my SMSF until four years ago when I left the Commonwealth Bank. The bank’s sponsored super scheme was well run, had good investment options and was particularly cost effective – so there wasn’t a lot to be gained in having my own SMSF.

Why did you start it up?

Leaving the bank gave me the opportunity to really think about super – and triggered me to take some action.

How big is it?

About $1.5 million.

Is it more or less difficult to manage than you thought it would be?

No – although it does take some time.

Do you enjoy managing it?

Yes – although there is a fair bit of administration.

Are you pleased with its performance?

Yes, it has done particularly well over the last year. I haven’t crunched all the numbers yet for the 12 months to 30 June, however I think it will do around 25% after tax – the average balanced fund will do about 15% for the year.

What is your asset allocation?

  • Australian equities 55%
  • Cash, term deposits, hybrids: 35%
  • Property: 8%
  • International equities 2%

I would like a higher allocation to international equities, however I didn’t listen to my own advice and invest more when the AUD was around $1.05 USD. More recently, I have been buying companies such as CSL, which will benefit from a lower AUD.

On the fixed interest side, I am a mega bear on long bonds – so all our exposure is through floating rate hybrid issues that re-price every 90 days.

With our equities portfolio, it looks a little like the Switzer Income Oriented Portfolio. We have about 25 stocks, with a sector allocation as follows:

What are your favourite investments/stocks and why?

There are two absolute standouts – Commonwealth Bank and Ramsay Health Care. CBA – floated at $5.40 in 1991 (now circa $71.00), dividend increased from $0.40 to circa $3.50 per share. With Ramsay, have a look at the share price graph over the last 10 years – phenomenal. CSL is not too bad, either.

What investments do you have outside of superannuation?

Shares (very overweight CBA), plus an investment property. I haven’t brought the shares into the super fund yet because of the capital gains tax – obviously, I will look to do this at some stage.

Do you use an advisor or any kind of service provider?

I do it all myself – including the accounting. I am in the 1% of trustees who don’t use an accountant or administrator – and I don’t recommend this to others.

I do it because it helps keeps me in touch with the issues that accountants face in working with their clients. I use specialist SMSF software from BGL (which many accounting firms also use), with its double entry “debits and credits”. I create an accounting file and send this to my auditor (the only external provider).

Of course, I also leverage the ideas and advice from all the expert contributors to the Switzer Super Report. Even if I disagree with an expert on a particular point, that is helpful as it encourages me to re-examine and confirm any actions or decisions I have made. As an investor, I think this is a really good discipline.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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