Subscribe to Enough Wealth. Copyright 2006-2008
The ups and downs of trying to accumulate a seven-figure net worth on a five-figure salary, loose weight, get fit, do a post-grad course and launch a financial planning business - while working full-time.
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".
Good move, this is the best time to add more cash to investments
ReplyDeleteI am doing the same
Which super fund did you use? I'm thinking of gearing my super but I don't know how to do it.
ReplyDeleteMy 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.
ReplyDeleteAnother 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!