Wednesday, 29 October 2008

Added some cash to my son's retirement account

DS2 has a "child superannuation account" I opened for him when he was two year old. It was initially invested 100% in the geared share option (which did very well for the first four years), but I switched it into 60% ungeared shares, 20% real estate and 20% bonds at the start of 2007 (I wish I'd done the same asset reallocation for MY investment portfolio!). So although the account has lost a bit of value in the past 12 months, it's performance over five years is still pretty good. I think it's too early to switch this account back into 100% geared stock investments (although I think that's probably a reasonable asset allocation for an 8 year old that can't withdraw the funds until retirement age in 50 years or so), but I decided to make a $1,000 contribution into his account yesterday while the stock market is "on sale".

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3 comments:

Moneymonk said...

Good move, this is the best time to add more cash to investments

I am doing the same

Norak said...

Which super fund did you use? I'm thinking of gearing my super but I don't know how to do it.

enoughwealth@yahoo.com said...

My son's child super account is with Macquarie. It has many managed funds options, one of which is a geared Australian equities fund. The good thing about investing in a geared fund is that they dynamically managed the level of gearing and you won't get any margin calls via a geared fund (although the unit value could go down to zero in a bad bear market). The disadvantage of gearing via managed funds is that the management fees can be quite high.

Another option for gearing that is available in my self-managed superannuation fund is to buy share investments using CFDs. So far I've only invested in CFDs in a small way outside of superannuation - and suffered a margin call and had my position liquidated. So I think investing in CFDs within superannuation is a bit too high risk for retirement savings!